Nankai Chemical Co (TSE:4040) ROC % : 7.97% (As of Dec. 2023)

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What is Nankai Chemical 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 %. Nankai Chemical Co's annualized return on capital (ROC %) for the quarter that ended in Dec. 2023 was 7.97%.

As of today (2024-05-26), Nankai Chemical Co's WACC % is 4.08%. Nankai Chemical Co's ROC % is 8.06% (calculated using TTM income statement data). Nankai Chemical 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.

Nankai Chemical Co ROC % Historical Data

The historical data trend for Nankai Chemical 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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Nankai Chemical Co ROC % Chart

Nankai Chemical Co Annual Data

Trend

Mar21

Mar22

Mar23

ROC %

12.55

4.80

4.41

Nankai Chemical Co Quarterly Data
	Mar21	Mar22	Dec22	Mar23	Jun23	Sep23	Dec23
ROC %	Get a 7-Day Free Trial			-	6.80	11.13	6.16	7.97

Nankai Chemical Co ROC % Calculation

Nankai Chemical Co's annualized Return on Capital (ROC %) for the fiscal year that ended in Mar. 2023 is calculated as:

	ROC % (A: Mar. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Mar. 2022 )	+	Invested Capital (A: Mar. 2023 ))	/ count )
=	796 * ( 1 - 23.08% )	/	( (13659	+	14111)	/ 2 )
=	612.2832	/	13885
=	4.41 %

where

	Invested Capital		(A: Mar. 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	))
=	16982	-	3027	-	( 1281	-	max(0, 8338	-	8634	+	1281	))
=	13659

	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	))
=	18346	-	3334	-	( 1301	-	max(0, 7949	-	8850	+	1301	))
=	14111

Nankai Chemical Co's annualized Return on Capital (ROC %) for the quarter that ended in Dec. 2023 is calculated as:

	ROC % (Q: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Sep. 2023 )	+	Invested Capital (Q: Dec. 2023 ))	/ count )
=	1588 * ( 1 - 26.51% )	/	( (14562	+	14706)	/ 2 )
=	1167.0212	/	14634
=	7.97 %

where

	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	))
=	18616	-	2540	-	( 1514	-	max(0, 6575	-	8559	+	1514	))
=	14562

	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	))
=	19503	-	3041	-	( 1924	-	max(0, 7256	-	9012	+	1924	))
=	14706

Note: The Operating Income data used here is four times the quarterly (Dec. 2023) data.

Nankai Chemical Co (TSE:4040) 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, Nankai Chemical Co's WACC % is 4.08%. Nankai Chemical Co's ROC % is 8.06% (calculated using TTM income statement data). Nankai Chemical 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.

Nankai Chemical Co ROC % Related Terms

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Nankai Chemical Co (TSE:4040) Business Description

Industry

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Comparable Companies

Traded in Other Exchanges

N/A

Address

1-12-19 Minamihorie, Yotsubashi Star Building, Nishi-ku, Osaka, JPN, 550-0015

Website

https://www.nankai-chem.co.jp

Nankai Chemical Co Ltd is engaged in the manufacturing and sales of chemical products, agricultural products, quasi-drugs and food additives. collecting, transporting, and recycling of industrial wastes.

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