PMEC (Primech Holdings) ROC % : -20.12% (As of Mar. 2024)

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What is Primech Holdings 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 %. Primech Holdings's annualized return on capital (ROC %) for the quarter that ended in Mar. 2024 was -20.12%.

As of today (2024-12-15), Primech Holdings's WACC % is 7.92%. Primech Holdings's ROC % is -7.83% (calculated using TTM income statement data). Primech Holdings earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Primech Holdings ROC % Historical Data

The historical data trend for Primech Holdings'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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Primech Holdings ROC % Chart

Primech Holdings Annual Data

Trend

Mar20

Mar21

Mar22

Mar23

Mar24

ROC %

3.62

38.02

-5.04

-7.06

-7.76

Primech Holdings Semi-Annual Data
	Mar20	Sep20	Mar21	Sep21	Mar22	Sep22	Mar23	Sep23	Mar24
ROC %	Get a 7-Day Free Trial				-13.94	-12.52	-0.71	-2.31	-20.12

Primech Holdings ROC % Calculation

Primech Holdings's annualized Return on Capital (ROC %) for the fiscal year that ended in Mar. 2024 is calculated as:

	ROC % (A: Mar. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Mar. 2023 )	+	Invested Capital (A: Mar. 2024 ))	/ count )
=	-2.571 * ( 1 - 13.27% )	/	( (29.01	+	28.455)	/ 2 )
=	-2.2298283	/	28.7325
=	-7.76 %

where

	Invested Capital		(A: Mar. 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	))
=	42.823	-	10.899	-	( 9.072	-	max(0, 24.522	-	27.436	+	9.072	))
=	29.01

	Invested Capital		(A: Mar. 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	))
=	45.509	-	9.406	-	( 7.648	-	max(0, 22.742	-	31.333	+	7.648	))
=	28.455

Primech Holdings's annualized Return on Capital (ROC %) for the quarter that ended in Mar. 2024 is calculated as:

	ROC % (Q: Mar. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Sep. 2023 )	+	Invested Capital (Q: Mar. 2024 ))	/ count )
=	-5.752 * ( 1 - 1.31% )	/	( (27.966	+	28.455)	/ 2 )
=	-5.6766488	/	28.2105
=	-20.12 %

where

	Invested Capital		(Q: Sep. 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	))
=	39.281	-	8.841	-	( 8.685	-	max(0, 22.552	-	25.026	+	8.685	))
=	27.966

	Invested Capital		(Q: Mar. 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	))
=	45.509	-	9.406	-	( 7.648	-	max(0, 22.742	-	31.333	+	7.648	))
=	28.455

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

Primech Holdings (NAS:PMEC) 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, Primech Holdings's WACC % is 7.92%. Primech Holdings's ROC % is -7.83% (calculated using TTM income statement data). Primech Holdings 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.

Primech Holdings ROC % Related Terms

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Primech Holdings Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Business Services » Primech Holdings Ltd (NAS:PMEC) » Definitions » ROC %

Comparable Companies

Traded in Other Exchanges

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Address

23 Ubi Crescent, Singapore, SGP, 408579

Website

https://www.primechholdings.com

Primech Holdings Ltd is a technology-driven facilities services provider in the public and private sectors operating mainly in Singapore. The services offered by the company include Facilities services, Stewarding services, Cleaning services to offices, Cleaning services to homes, and Cleaning Supplies.