Kumagai Gumi Co (TSE:1861) ROC % : 0.55% (As of Sep. 2024)

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What is Kumagai Gumi 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 %. Kumagai Gumi Co's annualized return on capital (ROC %) for the quarter that ended in Sep. 2024 was 0.55%.

As of today (2025-03-23), Kumagai Gumi Co's WACC % is 1.49%. Kumagai Gumi Co's ROC % is 0.99% (calculated using TTM income statement data). Kumagai Gumi Co earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Kumagai Gumi Co ROC % Historical Data

The historical data trend for Kumagai Gumi 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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Kumagai Gumi Co ROC % Chart

Kumagai Gumi Co Annual Data

Trend

Mar15

Mar16

Mar17

Mar18

Mar19

Mar20

Mar21

Mar22

Mar23

Mar24

ROC %

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9.63

9.19

7.20

3.25

3.06

Kumagai Gumi Co Quarterly Data
	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23	Mar24	Jun24	Sep24	Dec24
ROC %	Get a 7-Day Free Trial															5.04	3.05	0.19	0.55	0.11

Kumagai Gumi Co ROC % Calculation

Kumagai Gumi Co'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 )
=	12621 * ( 1 - 33.97% )	/	( (251566	+	293263)	/ 2 )
=	8333.6463	/	272414.5
=	3.06 %

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	))
=	376650	-	84107	-	( 40977	-	max(0, 170922	-	298276	+	40977	))
=	251566

	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	))
=	467232	-	103896	-	( 70073	-	max(0, 243460	-	369460	+	70073	))
=	293263

Kumagai Gumi Co's annualized Return on Capital (ROC %) for the quarter that ended in Sep. 2024 is calculated as:

	ROC % (Q: Sep. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jun. 2024 )	+	Invested Capital (Q: Sep. 2024 ))	/ count )
=	3152 * ( 1 - 47.35% )	/	( (0	+	301483)	/ 1 )
=	1659.528	/	301483
=	0.55 %

where

	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	))
=	0	-	0	-	( 0	-	max(0, 0	-	0	+	0	))
=	0

	Invested Capital		(Q: Sep. 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	))
=	430910	-	82810	-	( 46617	-	max(0, 202575	-	320397	+	46617	))
=	301483

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

Kumagai Gumi Co (TSE:1861) 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, Kumagai Gumi Co's WACC % is 1.49%. Kumagai Gumi Co's ROC % is 0.99% (calculated using TTM income statement data). Kumagai Gumi 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.

Kumagai Gumi Co ROC % Related Terms

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Kumagai Gumi Co Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Construction » Kumagai Gumi Co Ltd (TSE:1861) » Definitions » ROC %

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Address

2-1 Tsukudocho, Shinjuku-ku, Tokyo, 162-8557, JPN, 162-8557

Website

http://www.kumagaigumi.co.jp

Kumagai Gumi Co Ltd is a Japanese company that provides services in construction and civil engineering. The company analyzes, designs, and supervises complex construction projects. It also offers engineering and technical services throughout the construction process. These projects include roads, railways, airports, water systems, and other public facilities. In addition, the company is engaged in manufacturing and selling construction materials and machinery. Construction activities account for the majority of revenue. The company generates additional revenue from developing residential and commercial complexes and either operating the building or acting as a broker and selling the real estate.

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