Seven Generations Energy (TSX:VII) ROC % : 4.19% (As of Dec. 2020)

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What is Seven Generations 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 %. Seven Generations Energy's annualized return on capital (ROC %) for the quarter that ended in Dec. 2020 was 4.19%.

As of today (2024-05-26), Seven Generations Energy's WACC % is 0.00%. Seven Generations Energy's ROC % is 0.00% (calculated using TTM income statement data). Seven Generations Energy earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Seven Generations Energy ROC % Historical Data

The historical data trend for Seven Generations 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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Seven Generations Energy ROC % Chart

Seven Generations Energy Annual Data

Trend

Dec13

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

ROC %

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4.60

7.08

9.10

7.16

-0.76

Seven Generations Energy Quarterly Data
	Mar16	Jun16	Sep16	Dec16	Mar17	Jun17	Sep17	Dec17	Mar18	Jun18	Sep18	Dec18	Mar19	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20
ROC %	Get a 7-Day Free Trial															7.68	0.84	-4.88	-1.64	4.19

Seven Generations Energy ROC % Calculation

Seven Generations Energy's annualized Return on Capital (ROC %) for the fiscal year that ended in Dec. 2020 is calculated as:

	ROC % (A: Dec. 2020 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2019 )	+	Invested Capital (A: Dec. 2020 ))	/ count )
=	-66.9 * ( 1 - 23.24% )	/	( (8095	+	5354.7)	/ 2 )
=	-51.35244	/	6724.85
=	-0.76 %

where

	Invested Capital		(A: Dec. 2019 )
=	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	))
=	8437.4	-	402.7	-	( 9.6	-	max(0, 438.7	-	378.4	+	9.6	))
=	8095

	Invested Capital		(A: Dec. 2020 )
=	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	))
=	5692.3	-	332.9	-	( 4.7	-	max(0, 376	-	384.7	+	4.7	))
=	5354.7

Seven Generations Energy's annualized Return on Capital (ROC %) for the quarter that ended in Dec. 2020 is calculated as:

	ROC % (Q: Dec. 2020 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Sep. 2020 )	+	Invested Capital (Q: Dec. 2020 ))	/ count )
=	335.6 * ( 1 - 24.69% )	/	( (6697.8	+	5354.7)	/ 2 )
=	252.74036	/	6026.25
=	4.19 %

where

	Invested Capital		(Q: Sep. 2020 )
=	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	))
=	7017.3	-	317.7	-	( 31.4	-	max(0, 348.2	-	350	+	31.4	))
=	6697.8

	Invested Capital		(Q: Dec. 2020 )
=	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	))
=	5692.3	-	332.9	-	( 4.7	-	max(0, 376	-	384.7	+	4.7	))
=	5354.7

Note: The Operating Income data used here is four times the quarterly (Dec. 2020) data.

Seven Generations Energy (TSX:VII) 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, Seven Generations Energy's WACC % is 0.00%. Seven Generations Energy's ROC % is 0.00% (calculated using TTM income statement data). Seven Generations 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.

Seven Generations Energy ROC % Related Terms

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Seven Generations Energy (TSX:VII) Business Description

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Address

525 - 8 Avenue SW, Suite 4400, Eighth Avenue Place East, Calgary, AB, CAN, T2P 1G1

Website

http://www.7genergy.com

Seven Generations Energy Ltd is an independent energy company focused on the acquisition, development, and optimization of high-quality, tight rock, natural gas resource plays. The company employs long-reach and horizontal drilling to produce resources of natural gas, condensate, and natural gas liquids. In addition to drilling operations, Seven Generations owns several gathering lines and processing facilities. The company depends on a skilled technical and business team to identify, capture, develop, and catalyze production from resource plays.