NZTCF (Spark New Zealand) ROC % : 7.44% (As of Jun. 2024)

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What is Spark New Zealand 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 %. Spark New Zealand's annualized return on capital (ROC %) for the quarter that ended in Jun. 2024 was 7.44%.

As of today (2024-12-13), Spark New Zealand's WACC % is 5.53%. Spark New Zealand's ROC % is 8.48% (calculated using TTM income statement data). Spark New Zealand generates higher returns on investment than it costs the company to raise the capital needed for that investment. It 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.

Spark New Zealand ROC % Historical Data

The historical data trend for Spark New Zealand'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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Spark New Zealand ROC % Chart

Spark New Zealand Annual Data

Trend

Jun15

Jun16

Jun17

Jun18

Jun19

Jun20

Jun21

Jun22

Jun23

Jun24

ROC %

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12.23

11.20

11.04

16.10

8.65

Spark New Zealand Semi-Annual Data
	Dec14	Jun15	Dec15	Jun16	Dec16	Jun17	Dec17	Jun18	Dec18	Jun19	Dec19	Jun20	Dec20	Jun21	Dec21	Jun22	Dec22	Jun23	Dec23	Jun24
ROC %	Get a 7-Day Free Trial															12.38	46.43	-6.63	9.61	7.44

Spark New Zealand ROC % Calculation

Spark New Zealand's annualized Return on Capital (ROC %) for the fiscal year that ended in Jun. 2024 is calculated as:

	ROC % (A: Jun. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Jun. 2023 )	+	Invested Capital (A: Jun. 2024 ))	/ count )
=	343.155 * ( 1 - 38.52% )	/	( (2377.3	+	2501.535)	/ 2 )
=	210.971694	/	2439.4175
=	8.65 %

where

	Invested Capital		(A: Jun. 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	))
=	2749.693	-	311.043	-	( 61.35	-	max(0, 521.472	-	661.963	+	61.35	))
=	2377.3

	Invested Capital		(A: Jun. 2024 )
=	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	))
=	2845.304	-	337.63	-	( 36.219	-	max(0, 650.706	-	656.845	+	36.219	))
=	2501.535

Spark New Zealand's annualized Return on Capital (ROC %) for the quarter that ended in Jun. 2024 is calculated as:

	ROC % (Q: Jun. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Dec. 2023 )	+	Invested Capital (Q: Jun. 2024 ))	/ count )
=	343.77 * ( 1 - 44.6% )	/	( (2619.788	+	2501.535)	/ 2 )
=	190.44858	/	2560.6615
=	7.44 %

where

	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	))
=	2924.082	-	303.049	-	( 61.605	-	max(0, 682.016	-	683.261	+	61.605	))
=	2619.788

	Invested Capital		(Q: Jun. 2024 )
=	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	))
=	2845.304	-	337.63	-	( 36.219	-	max(0, 650.706	-	656.845	+	36.219	))
=	2501.535

Note: The Operating Income data used here is two times the semi-annual (Jun. 2024) data.

Spark New Zealand (OTCPK:NZTCF) 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, Spark New Zealand's WACC % is 5.53%. Spark New Zealand's ROC % is 8.48% (calculated using TTM income statement data). Spark New Zealand generates higher returns on investment than it costs the company to raise the capital needed for that investment. It 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.

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.

Spark New Zealand ROC % Related Terms

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Spark New Zealand Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Communication Services » Telecommunication Services » Spark New Zealand Ltd (OTCPK:NZTCF) » Definitions » ROC %

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Traded in Other Exchanges

SPKKY:USA SPK:New Zealand NZTA:Germany NZT:Germany NZT:Germany NZTA:Germany NZT:Germany SPK:Australia

Address

167 Victoria Street West, Level 2, Spark City, Private Bag 92028, Auckland, NTL, NZL, 1010

Website

https://www.sparknz.co.nz

Spark is one of only three integrated telecommunications operators in New Zealand. It is the leading mobile network operator with low- to mid-40% subscriber and revenue share, and the dominant provider of fixed-line broadband services with a mid-30% subscriber share. It has a commanding presence in the New Zealand corporate and wholesale telecommunications services provision space. Spark supplements its core telecommunications operations and related infrastructure with IT products and services across cloud, managed data and networks, procurement, data centers, and Internet of Things. Its operations are entirely based in New Zealand, except for its 41% interest in Southern Cross Submarine Cables, which has zero book value and to which Spark has no funding obligations.