Polestar Automotive Holding UK (Polestar Automotive Holding UK) ROC % : -20.88% (As of Sep. 2023)

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What is Polestar Automotive Holding UK 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 %. Polestar Automotive Holding UK's annualized return on capital (ROC %) for the quarter that ended in Sep. 2023 was -20.88%.

As of today (2024-06-11), Polestar Automotive Holding UK's WACC % is 7.22%. Polestar Automotive Holding UK's ROC % is -13.72% (calculated using TTM income statement data). Polestar Automotive Holding UK earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Polestar Automotive Holding UK ROC % Historical Data

The historical data trend for Polestar Automotive Holding UK'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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Polestar Automotive Holding UK ROC % Chart

Polestar Automotive Holding UK Annual Data

Trend

Dec19

Dec20

Dec21

Dec22

ROC %

-24.89

-42.32

-30.76

Polestar Automotive Holding UK Quarterly Data
	Dec19	Dec20	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23
ROC %	Get a 7-Day Free Trial							-23.58	20.17	-29.77	-25.62	-20.88

Polestar Automotive Holding UK ROC % Calculation

Polestar Automotive Holding UK'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 )
=	-910.367 * ( 1 - -3.74% )	/	( (2639.087	+	3502.088)	/ 2 )
=	-944.4147258	/	3070.5875
=	-30.76 %

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	))
=	3309.693	-	2104.336	-	( 757.935	-	max(0, 3040.716	-	1606.986	+	757.935	))
=	2639.087

	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	))
=	3942.451	-	1512.531	-	( 973.877	-	max(0, 3252.502	-	2180.334	+	973.877	))
=	3502.088

Polestar Automotive Holding UK's annualized Return on Capital (ROC %) for the quarter that ended in Sep. 2023 is calculated as:

	ROC % (Q: Sep. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jun. 2023 )	+	Invested Capital (Q: Sep. 2023 ))	/ count )
=	-1044.82 * ( 1 - -1.69% )	/	( (4835.081	+	5341.94)	/ 2 )
=	-1062.477458	/	5088.5105
=	-20.88 %

where

	Invested Capital		(Q: 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	))
=	4255.245	-	1085.44	-	( 1057.412	-	max(0, 4072.222	-	2406.946	+	1057.412	))
=	4835.081

	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	))
=	4386.464	-	1066.265	-	( 951.088	-	max(0, 4501.037	-	2479.296	+	951.088	))
=	5341.94

Note: The Operating Income data used here is four times the quarterly (Sep. 2023) data.

Polestar Automotive Holding UK (NAS:PSNY) 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, Polestar Automotive Holding UK's WACC % is 7.22%. Polestar Automotive Holding UK's ROC % is -13.72% (calculated using TTM income statement data). Polestar Automotive Holding UK 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.

Polestar Automotive Holding UK ROC % Related Terms

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Polestar Automotive Holding UK (Polestar Automotive Holding UK) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Cyclical » Vehicles & Parts » Polestar Automotive Holding UK PLC (NAS:PSNY) » Definitions » ROC %

Comparable Companies

Traded in Other Exchanges

PSNYW:USA A4N1:Germany

Address

Assar Gabrielssons Vag 9, Gothenburg, SWE, 405 31

Website

https://www.polestar.com

Polestar Automotive Holding UK PLC operates as an electric vehicle manufacturer. It engages in designing products that are engineered to excite consumers and drive change. Polestar defines market-leading standards in design, technology, and sustainability. Polestar was established as a premium electric car brand by Volvo Cars and Geely Holdings. Polestar has produced two electric performance cars namely Polestar 1 and Polestar 2. Geographically, it derives a majority of revenue from USA.