Barka Desalination Co (MUS:BRDE) ROC % : 2.36% (As of Dec. 2023)

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What is Barka Desalination Co 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 %. Barka Desalination Co's annualized return on capital (ROC %) for the quarter that ended in Dec. 2023 was 2.36%.

As of today (2024-06-13), Barka Desalination Co's WACC % is 3.86%. Barka Desalination Co's ROC % is 2.36% (calculated using TTM income statement data). Barka Desalination Co earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Barka Desalination Co ROC % Historical Data

The historical data trend for Barka Desalination Co'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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Barka Desalination Co ROC % Chart

Barka Desalination Co Annual Data

Trend

Dec21

Dec22

Dec23

ROC %

4.33

3.19

2.36

Barka Desalination Co Semi-Annual Data
	Dec21	Dec22	Dec23
ROC %	4.33	3.19	2.36

Barka Desalination Co ROC % Calculation

Barka Desalination Co's annualized Return on Capital (ROC %) for the fiscal year that ended in Dec. 2023 is calculated as:

	ROC % (A: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2022 )	+	Invested Capital (A: Dec. 2023 ))	/ count )
=	4.968 * ( 1 - 49.1% )	/	( (109.136	+	105.434)	/ 2 )
=	2.528712	/	107.285
=	2.36 %

where

	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	))
=	108.574	-	1.148	-	( 2.431	-	max(0, 6.006	-	4.296	+	2.431	))
=	109.136

	Invested Capital		(A: Dec. 2023 )
=	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	))
=	104.837	-	1.706	-	( 2.434	-	max(0, 6.644	-	4.341	+	2.434	))
=	105.434

Barka Desalination Co's annualized Return on Capital (ROC %) for the quarter that ended in Dec. 2023 is calculated as:

	ROC % (Q: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Dec. 2022 )	+	Invested Capital (Q: Dec. 2023 ))	/ count )
=	4.968 * ( 1 - 49.1% )	/	( (109.136	+	105.434)	/ 2 )
=	2.528712	/	107.285
=	2.36 %

where

	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	))
=	108.574	-	1.148	-	( 2.431	-	max(0, 6.006	-	4.296	+	2.431	))
=	109.136

	Invested Capital		(Q: Dec. 2023 )
=	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	))
=	104.837	-	1.706	-	( 2.434	-	max(0, 6.644	-	4.341	+	2.434	))
=	105.434

Note: The Operating Income data used here is one times the annual (Dec. 2023) data.

Barka Desalination Co (MUS:BRDE) 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, Barka Desalination Co's WACC % is 3.86%. Barka Desalination Co's ROC % is 2.36% (calculated using TTM income statement data). Barka Desalination Co 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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Barka Desalination Co (MUS:BRDE) Business Description

Industry

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Traded in Other Exchanges

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Address

Al Wilaj Street, Way No 1013 Al Qurm, PO Box 252, Building No 1022, Office No 16, 1st Floor, Bousher, Muscat, OMN, 103

Website

https://www.barkadesalination.com

Barka Desalination Co is engaged in operation of seawater desalination plant in Oman. The objectives of the Company are to acquire, develop, finance, design, construct, operate, maintain a desalination facility at Barka Independent Water Project, a sea water reverse osmosis (SWRO) plant located in Barka, South Batinah Governorate, Sultanate of Oman.

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