Premier Foods (STU:FOJ1) ROC % : 4.83% (As of Sep. 2023)

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What is Premier Foods 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 %. Premier Foods's annualized return on capital (ROC %) for the quarter that ended in Sep. 2023 was 4.83%.

As of today (2024-05-26), Premier Foods's WACC % is 8.25%. Premier Foods's ROC % is 6.31% (calculated using TTM income statement data). Premier Foods earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Premier Foods ROC % Historical Data

The historical data trend for Premier Foods'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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Premier Foods ROC % Chart

Premier Foods Annual Data

Trend

Dec13

Mar16

Mar17

Mar18

Mar19

Mar20

Mar21

Mar22

Mar23

Mar24

ROC %

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3.29

4.19

4.37

4.54

6.31

Premier Foods Semi-Annual Data
	Dec13	Jun14	Sep15	Mar16	Sep16	Mar17	Sep17	Mar18	Sep18	Mar19	Sep19	Mar20	Sep20	Mar21	Sep21	Mar22	Sep22	Mar23	Sep23	Mar24
ROC %	Get a 7-Day Free Trial															5.60	3.62	5.60	4.83	8.06

Premier Foods ROC % Calculation

Premier Foods'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 )
=	207.731 * ( 1 - 25.69% )	/	( (2524.86	+	2371.192)	/ 2 )
=	154.3649061	/	2448.026
=	6.31 %

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	))
=	2727.076	-	212.984	-	( 72.997	-	max(0, 308.651	-	297.883	+	72.997	))
=	2524.86

	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	))
=	2726.099	-	309.784	-	( 119.588	-	max(0, 325.332	-	370.455	+	119.588	))
=	2371.192

Premier Foods'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: Mar. 2023 )	+	Invested Capital (Q: Sep. 2023 ))	/ count )
=	160.032 * ( 1 - 26.51% )	/	( (2524.86	+	2346.907)	/ 2 )
=	117.6075168	/	2435.8835
=	4.83 %

where

	Invested Capital		(Q: 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	))
=	2727.076	-	212.984	-	( 72.997	-	max(0, 308.651	-	297.883	+	72.997	))
=	2524.86

	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	))
=	2696.194	-	343.373	-	( 78.509	-	max(0, 361.348	-	367.262	+	78.509	))
=	2346.907

Note: The Operating Income data used here is two times the semi-annual (Sep. 2023) data.

Premier Foods (STU:FOJ1) 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, Premier Foods's WACC % is 8.25%. Premier Foods's ROC % is 6.31% (calculated using TTM income statement data). Premier Foods 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.

Premier Foods ROC % Related Terms

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Premier Foods (STU:FOJ1) Business Description

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GURUFOCUS.COM » STOCK LIST » Consumer Defensive » Consumer Packaged Goods » Premier Foods PLC (STU:FOJ1) » Definitions » ROC %

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Address

Premier House, Griffiths Way, Centrium Business Park, Saint Albans, Hertfordshire, GBR, AL1 2RE

Website

https://www.premierfoods.co.uk

Premier Foods PLC is a food manufacturing company. It manufactures, processes, and distributes food products. The company's operating segments include Grocery and Sweet Treats. Grocery segment primarily sells savoury ambient food products. The Sweet Treats segment sells sweet ambient food products. It generates maximum revenue from the Grocery segment. Geographically, it derives a majority of its revenue from the United Kingdom and also has a presence in Other Europe and Rest of world. Some of the company brands include Ambrosia, Angel Delight, Atora, Batchelors, Be-Ro, Bird's, Bisto, Cadbury, Coffee Compliment, Homepride, and others.

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