True North Energy (True North Energy) ROC % : -15.86% (As of Oct. 2008)

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What is True North Energy 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 %. True North Energy's annualized return on capital (ROC %) for the quarter that ended in Oct. 2008 was -15.86%.

As of today (2024-05-09), True North Energy's WACC % is 0.00%. True North Energy's ROC % is 0.00% (calculated using TTM income statement data). True North Energy earns returns that do not match up to its cost of capital. It will destroy value as it grows.

True North Energy ROC % Historical Data

The historical data trend for True North Energy'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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True North Energy ROC % Chart

True North Energy Annual Data

Trend

Apr05

Apr06

Apr07

Apr08

ROC %

-30.95

-34.39

1,162.84

-284.01

True North Energy Quarterly Data
	Jul05	Oct05	Jan06	Apr06	Jul06	Oct06	Jan07	Apr07	Jul07	Oct07	Jan08	Apr08	Jul08	Oct08
ROC %	Get a 7-Day Free Trial									72.05	-20.52	-11.67	-2.36	-15.86

True North Energy ROC % Calculation

True North Energy's annualized Return on Capital (ROC %) for the fiscal year that ended in Apr. 2008 is calculated as:

	ROC % (A: Apr. 2008 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Apr. 2007 )	+	Invested Capital (A: Apr. 2008 ))	/ count )
=	-10.494 * ( 1 - 0% )	/	( (1.132	+	6.258)	/ 2 )
=	-10.494	/	3.695
=	-284.01 %

where

	Invested Capital		(A: Apr. 2007 )
=	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	))
=	1.542	-	0.142	-	( 0.268	-	max(0, 0.5	-	0.833	+	0.268	))
=	1.132

	Invested Capital		(A: Apr. 2008 )
=	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	))
=	6.23	-	1.263	-	( 0.228	-	max(0, 2.026	-	0.735	+	0.228	))
=	6.258

True North Energy's annualized Return on Capital (ROC %) for the quarter that ended in Oct. 2008 is calculated as:

	ROC % (Q: Oct. 2008 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jul. 2008 )	+	Invested Capital (Q: Oct. 2008 ))	/ count )
=	-0.912 * ( 1 - 0% )	/	( (5.971	+	5.528)	/ 2 )
=	-0.912	/	5.7495
=	-15.86 %

where

	Invested Capital		(Q: Jul. 2008 )
=	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	))
=	6.21	-	1.411	-	( 0.527	-	max(0, 2.2	-	1.028	+	0.527	))
=	5.971

	Invested Capital		(Q: Oct. 2008 )
=	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	))
=	5.311	-	1.072	-	( 0.164	-	max(0, 1.631	-	0.342	+	0.164	))
=	5.528

Note: The Operating Income data used here is four times the quarterly (Oct. 2008) data.

True North Energy (OTCPK:TNEN) 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, True North Energy's WACC % is 0.00%. True North Energy's ROC % is 0.00% (calculated using TTM income statement data). True North Energy 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.

True North Energy ROC % Related Terms

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True North Energy (True North Energy) Business Description

Industry

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Address

7151 Gaston Avenue, Suite 801, Dallas, TX, USA, 75214

Website

https://www.tnencorp.com

True North Energy Corp is an independent oil and gas company. It is engaged in the acquisition, exploration, development, and production of oil and gas properties located throughout the United States. The company currently holds assets in Colorado and Oklahoma.