Mohammed Hadi AL Rasheed & Partners Co (SAU:9601) ROC % : 31.67% (As of Jun. 2024)

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What is Mohammed Hadi AL Rasheed & Partners 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 %. Mohammed Hadi AL Rasheed & Partners Co's annualized return on capital (ROC %) for the quarter that ended in Jun. 2024 was 31.67%.

As of today (2024-12-13), Mohammed Hadi AL Rasheed & Partners Co's WACC % is 9.80%. Mohammed Hadi AL Rasheed & Partners Co's ROC % is 31.15% (calculated using TTM income statement data). Mohammed Hadi AL Rasheed & Partners Co 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.

Mohammed Hadi AL Rasheed & Partners Co ROC % Historical Data

The historical data trend for Mohammed Hadi AL Rasheed & Partners 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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Mohammed Hadi AL Rasheed & Partners Co ROC % Chart

Mohammed Hadi AL Rasheed & Partners Co Annual Data

Trend

Dec22

Dec23

ROC %

13.30

23.11

Mohammed Hadi AL Rasheed & Partners Co Semi-Annual Data
	Dec22	Jun23	Dec23	Jun24
ROC %	-	12.62	32.84	31.67

Mohammed Hadi AL Rasheed & Partners Co ROC % Calculation

Mohammed Hadi AL Rasheed & Partners 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 )
=	50.742 * ( 1 - 6% )	/	( (198.593	+	214.2)	/ 2 )
=	47.69748	/	206.3965
=	23.11 %

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	))
=	216.976	-	9.279	-	( 9.104	-	max(0, 31.943	-	110.663	+	9.104	))
=	198.593

	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	))
=	247.763	-	13.755	-	( 19.808	-	max(0, 38.736	-	137.206	+	19.808	))
=	214.2

Mohammed Hadi AL Rasheed & Partners Co'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 )
=	76.164 * ( 1 - 4.55% )	/	( (214.2	+	244.945)	/ 2 )
=	72.698538	/	229.5725
=	31.67 %

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	))
=	247.763	-	13.755	-	( 19.808	-	max(0, 38.736	-	137.206	+	19.808	))
=	214.2

	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	))
=	300.254	-	10.929	-	( 44.38	-	max(0, 59.349	-	193.021	+	44.38	))
=	244.945

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

Mohammed Hadi AL Rasheed & Partners Co (SAU:9601) 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, Mohammed Hadi AL Rasheed & Partners Co's WACC % is 9.80%. Mohammed Hadi AL Rasheed & Partners Co's ROC % is 31.15% (calculated using TTM income statement data). Mohammed Hadi AL Rasheed & Partners Co 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.

Mohammed Hadi AL Rasheed & Partners Co ROC % Related Terms

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Mohammed Hadi AL Rasheed & Partners Co Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Basic Materials » Metals & Mining » Mohammed Hadi AL Rasheed & Partners Co (SAU:9601) » Definitions » ROC %

Comparable Companies

Traded in Other Exchanges

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Address

Dammam Road, Building No. 2865, Granada District, Riyadh, SAU, 8137-13242

Website

https://www.alrasheedco.com.sa

Mohammed Hadi AL Rasheed & Partners Co is a company whose main activities are operating quarries, rewinding the magnetic core of generators, motors, and electrical transformers, general construction for residential buildings, general construction for non-residential buildings such as schools, hospitals, hotels, etc, also includes the construction of roads, streets, sidewalks, and road supplies, extending pipes of various types for electricity, communications, and others.

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