Shanghai Suochen Information Technology Co (SHSE:688507) ROC % : -19.61% (As of Mar. 2024)

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What is Shanghai Suochen Information Technology 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 %. Shanghai Suochen Information Technology Co's annualized return on capital (ROC %) for the quarter that ended in Mar. 2024 was -19.61%.

As of today (2024-06-18), Shanghai Suochen Information Technology Co's WACC % is 10.24%. Shanghai Suochen Information Technology Co's ROC % is 9.22% (calculated using TTM income statement data). Shanghai Suochen Information Technology Co earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Shanghai Suochen Information Technology Co ROC % Historical Data

The historical data trend for Shanghai Suochen Information Technology 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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Shanghai Suochen Information Technology Co ROC % Chart

Shanghai Suochen Information Technology Co Annual Data

Trend

Dec19

Dec20

Dec21

Dec22

Dec23

ROC %

-1.93

16.95

20.35

16.34

12.31

Shanghai Suochen Information Technology Co Quarterly Data
	Dec19	Dec20	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23	Mar24
ROC %	Get a 7-Day Free Trial								-16.96	-14.44	-5.96	75.25	-19.61

Shanghai Suochen Information Technology Co ROC % Calculation

Shanghai Suochen Information Technology 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 )
=	69.038 * ( 1 - -3.83% )	/	( (441.733	+	722.585)	/ 2 )
=	71.6821554	/	582.159
=	12.31 %

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	))
=	724.98	-	113.782	-	( 169.465	-	max(0, 161.212	-	542.897	+	169.465	))
=	441.733

	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	))
=	3087.416	-	137.8	-	( 2227.031	-	max(0, 157.211	-	2778.806	+	2227.031	))
=	722.585

Shanghai Suochen Information Technology Co'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: Dec. 2023 )	+	Invested Capital (Q: Mar. 2024 ))	/ count )
=	-141.532 * ( 1 - -0.89% )	/	( (722.585	+	733.592)	/ 2 )
=	-142.7916348	/	728.0885
=	-19.61 %

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	))
=	3087.416	-	137.8	-	( 2227.031	-	max(0, 157.211	-	2778.806	+	2227.031	))
=	722.585

	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	))
=	2999.207	-	104.023	-	( 2161.592	-	max(0, 119.033	-	2695.161	+	2161.592	))
=	733.592

Note: The Operating Income data used here is four times the quarterly (Mar. 2024) data.

Shanghai Suochen Information Technology Co (SHSE:688507) 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, Shanghai Suochen Information Technology Co's WACC % is 10.24%. Shanghai Suochen Information Technology Co's ROC % is 9.22% (calculated using TTM income statement data). Shanghai Suochen Information Technology 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.

Shanghai Suochen Information Technology Co ROC % Related Terms

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Shanghai Suochen Information Technology Co (SHSE:688507) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Technology » Software » Shanghai Suochen Information Technology Co Ltd (SHSE:688507) » Definitions » ROC %

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Traded in Other Exchanges

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Address

No. 27, Xinjinqiao Road, 2F, Building No. 13, China (Shanghai) Pilot Free Trade Zone, Shanghai, CHN, 201206

Website

http://www.demxs.com

Shanghai Suochen Information Technology Co Ltd takes simulation to lead the future, achieve customer innovation as its corporate vision, and develops engineering simulation software and related solutions independently. Suochen Technology is a high-tech enterprise focusing on CAE software R&D, sales and service. Computer Aided Engineering (CAE) refers to the use of computer software to simulate the working status and behavior of products/engineering projects based on physical models in the product/engineering design stage to predict their functional availability, reliability, efficiency and safety. performance, etc., to achieve product/engineering design optimization, to ensure that the product/project achieves the expected function and meets various performance indicators.

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