Arras Group SpA (MIL:AGU) ROC % : -31.06% (As of Dec. 2022)

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What is Arras Group SpA ROC %?

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. Arras Group SpA's annualized return on capital (ROC %) for the quarter that ended in Dec. 2022 was -31.06%.

As of today (2024-05-20), Arras Group SpA's WACC % is 9.66%. Arras Group SpA's ROC % is -31.06% (calculated using TTM income statement data). Arras Group SpA earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Arras Group SpA ROC % Historical Data

The historical data trend for Arras Group SpA's ROC % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

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Arras Group SpA ROC % Chart

Arras Group SpA Annual Data

Trend

Dec21

Dec22

ROC %

-20.36

-31.06

Arras Group SpA Semi-Annual Data
	Dec21	Dec22
ROC %	-20.36	-31.06

Arras Group SpA ROC % Calculation

Arras Group SpA's annualized Return on Capital (ROC %) for the fiscal year that ended in Dec. 2022 is calculated as:

	ROC % (A: Dec. 2022 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2021 )	+	Invested Capital (A: Dec. 2022 ))	/ count )
=	-0.889 * ( 1 - 0% )	/	( (0.679	+	5.045)	/ 2 )
=	-0.889	/	2.862
=	-31.06 %

where

	Invested Capital		(A: Dec. 2021 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	0.757	-	0.124	-	( 0.007	-	max(0, 0.789	-	0.743	+	0.007	))
=	0.679

	Invested Capital		(A: Dec. 2022 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	5.02	-	0.322	-	( 0.05	-	max(0, 5.109	-	4.762	+	0.05	))
=	5.045

Arras Group SpA's annualized Return on Capital (ROC %) for the quarter that ended in Dec. 2022 is calculated as:

	ROC % (Q: Dec. 2022 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Dec. 2021 )	+	Invested Capital (Q: Dec. 2022 ))	/ count )
=	-0.889 * ( 1 - 0% )	/	( (0.679	+	5.045)	/ 2 )
=	-0.889	/	2.862
=	-31.06 %

where

	Invested Capital		(Q: Dec. 2021 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	0.757	-	0.124	-	( 0.007	-	max(0, 0.789	-	0.743	+	0.007	))
=	0.679

	Invested Capital		(Q: Dec. 2022 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	5.02	-	0.322	-	( 0.05	-	max(0, 5.109	-	4.762	+	0.05	))
=	5.045

Note: The Operating Income data used here is one times the annual (Dec. 2022) data.

Arras Group SpA (MIL:AGU) ROC % Explanation

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.

There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.

Why is ROC % important?

Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, Arras Group SpA's WACC % is 9.66%. Arras Group SpA's ROC % is -31.06% (calculated using TTM income statement data). Arras Group SpA earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Be Aware

Like ROE % and ROA %, ROC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.

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Arras Group SpA (MIL:AGU) Business Description

Industry

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Comparable Companies

Traded in Other Exchanges

6ZU:Germany

Address

Largo Domodossola 7, Milan, ITA, 20145

Website

https://www.arrasgroupspa.com

Arras Group SpA is a technological real estate development company for second homes, which currently operates in the Sardinian territory (in particular, in the north and south of the island), and is aimed at both Italian and foreign high-income customers. The Real Estate Projects developed by the Group typically arise in prestigious seaside locations in Sardinia, with the possibility of enjoying large internal and external spaces, as usually requested by national and international buyers interested in buying second homes. Its projects include Cannigione Sunrise, I Villini del Poetto, Seaside Costa Paradiso, The Tower Calasetta, Castle View, and others.