Fire & Flower Holdings (TSX:FAF) ROC % : -22.16% (As of Mar. 2023)

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What is Fire & Flower Holdings 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 %. Fire & Flower Holdings's annualized return on capital (ROC %) for the quarter that ended in Mar. 2023 was -22.16%.

As of today (2024-05-01), Fire & Flower Holdings's WACC % is 0.00%. Fire & Flower Holdings's ROC % is 0.00% (calculated using TTM income statement data). Fire & Flower Holdings earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Fire & Flower Holdings ROC % Historical Data

The historical data trend for Fire & Flower Holdings'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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Fire & Flower Holdings ROC % Chart

Fire & Flower Holdings Annual Data

Trend

Jan20

Jan21

Jan22

ROC %

-15.86

-6.26

-9.76

Fire & Flower Holdings Quarterly Data
	Feb18	May18	Aug18	Nov18	Apr19	Jul19	Oct19	Jan20	Apr20	Jul20	Oct20	Jan21	Apr21	Jul21	Oct21	Jan22	Apr22	Jul22	Oct22	Mar23
ROC %	Get a 7-Day Free Trial															-18.65	-17.54	-30.62	-22.55	-22.16

Fire & Flower Holdings ROC % Calculation

Fire & Flower Holdings's annualized Return on Capital (ROC %) for the fiscal year that ended in Jan. 2022 is calculated as:

	ROC % (A: Jan. 2022 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Jan. 2021 )	+	Invested Capital (A: Jan. 2022 ))	/ count )
=	-17.134 * ( 1 - -4.01% )	/	( (166.267	+	199.026)	/ 2 )
=	-17.8210734	/	182.6465
=	-9.76 %

where

	Invested Capital		(A: Jan. 2021 )
=	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	))
=	213.382	-	22.086	-	( 30.613	-	max(0, 28.291	-	53.32	+	30.613	))
=	166.267

	Invested Capital		(A: Jan. 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	))
=	222.88	-	25.446	-	( 19.847	-	max(0, 54.258	-	52.666	+	19.847	))
=	199.026

Fire & Flower Holdings's annualized Return on Capital (ROC %) for the quarter that ended in Mar. 2023 is calculated as:

	ROC % (Q: Mar. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Oct. 2022 )	+	Invested Capital (Q: Mar. 2023 ))	/ count )
=	-28 * ( 1 - -6.9% )	/	( (152.239	+	135.084)	/ 2 )
=	-29.932	/	143.6615
=	-20.84 %

where

	Invested Capital		(Q: Oct. 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	))
=	190.131	-	25.456	-	( 17.335	-	max(0, 36.878	-	49.314	+	17.335	))
=	152.239

	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	))
=	147.031	-	24.756	-	( 8.185	-	max(0, 50.823	-	38.014	+	8.185	))
=	135.084

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

Fire & Flower Holdings (TSX:FAF) 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, Fire & Flower Holdings's WACC % is 0.00%. Fire & Flower Holdings's ROC % is 0.00% (calculated using TTM income statement data). Fire & Flower Holdings 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.

Fire & Flower Holdings ROC % Related Terms

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Fire & Flower Holdings (TSX:FAF) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Healthcare » Healthcare Providers & Services » Fire & Flower Holdings Corp (TSX:FAF) » Definitions » ROC %

Comparable Companies

Traded in Other Exchanges

N/A

Address

130 King Street West, Suite 2500, Toronto, ON, CAN, M5X 1C8

Website

https://www.fireandflower.com

Fire & Flower Holdings Corp is an independent adult-use cannabis retailer focused on the Canadian market and international expansion opportunities. The company guides consumers through the complex world of cannabis through education-focused, retailing while the Hifyrea digital platform connects consumers with cannabis products. The company has three reportable segments namely, Retail segment, Wholesale and Logistics segment, and Digital Platform. Majority of the revenue is earned from Retail segment.