ADF Group (TSX:DRX) ROC % : 36.78% (As of Jul. 2024)

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What is ADF Group 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 %. ADF Group's annualized return on capital (ROC %) for the quarter that ended in Jul. 2024 was 36.78%.

As of today (2024-12-11), ADF Group's WACC % is -2.11%. ADF Group's ROC % is 28.24% (calculated using TTM income statement data). ADF Group 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.

ADF Group ROC % Historical Data

The historical data trend for ADF Group'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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ADF Group ROC % Chart

ADF Group Annual Data

Trend

Jan15

Jan16

Jan17

Jan18

Jan19

Jan20

Jan21

Jan22

Jan23

Jan24

ROC %

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0.38

6.26

7.35

9.54

18.81

ADF Group Quarterly Data
	Oct19	Jan20	Apr20	Jul20	Oct20	Jan21	Apr21	Jul21	Oct21	Jan22	Apr22	Jul22	Oct22	Jan23	Apr23	Jul23	Oct23	Jan24	Apr24	Jul24
ROC %	Get a 7-Day Free Trial															22.15	26.07	19.15	29.47	36.78

ADF Group ROC % Calculation

ADF Group's annualized Return on Capital (ROC %) for the fiscal year that ended in Jan. 2024 is calculated as:

	ROC % (A: Jan. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Jan. 2023 )	+	Invested Capital (A: Jan. 2024 ))	/ count )
=	50.139 * ( 1 - 18.93% )	/	( (225.689	+	206.617)	/ 2 )
=	40.6476873	/	216.153
=	18.81 %

where

	Invested Capital		(A: Jan. 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	))
=	271.617	-	38.735	-	( 7.193	-	max(0, 88.781	-	154.38	+	7.193	))
=	225.689

	Invested Capital		(A: Jan. 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	))
=	328.605	-	49.609	-	( 72.379	-	max(0, 105.476	-	215.576	+	72.379	))
=	206.617

ADF Group's annualized Return on Capital (ROC %) for the quarter that ended in Jul. 2024 is calculated as:

	ROC % (Q: Jul. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Apr. 2024 )	+	Invested Capital (Q: Jul. 2024 ))	/ count )
=	93.544 * ( 1 - 28.01% )	/	( (214.595	+	151.573)	/ 2 )
=	67.3423256	/	183.084
=	36.78 %

where

	Invested Capital		(Q: Apr. 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	))
=	333.978	-	71.025	-	( 48.358	-	max(0, 93.034	-	220.528	+	48.358	))
=	214.595

	Invested Capital		(Q: Jul. 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	))
=	286.645	-	59.034	-	( 76.038	-	max(0, 80.89	-	170.99	+	76.038	))
=	151.573

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

ADF Group (TSX:DRX) 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, ADF Group's WACC % is -2.11%. ADF Group's ROC % is 28.24% (calculated using TTM income statement data). ADF Group 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.

ADF Group ROC % Related Terms

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ADF Group Business Description

Industry

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ADFJF:USA 4QM:Germany

Address

300, rue Henry-Bessemer, Terrebonne, QC, CAN, J6Y 1T3

Website

https://www.adfgroup.com

ADF Group Inc involves in the design and engineering of connections, fabrication, including industrial coating, and the installation of steel structures and steel built-ups, as well as miscellaneous and architectural metalwork. The company's products and services are intended for the five principal segments of the non-residential construction industry: Office towers and high-rises, Commercial and recreational buildings, Airport facilities, Industrial complexes, and Transport infrastructures. It serves the client base in the non-residential construction industry, such as general contractors, project owners, engineering firms and project architects, and other steel structure fabricators in the United States and Canada.

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