Digihost Technology (TSXV:DGHI) ROC % : -37.98% (As of Sep. 2023)

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What is Digihost Technology 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 %. Digihost Technology's annualized return on capital (ROC %) for the quarter that ended in Sep. 2023 was -37.98%.

As of today (2024-04-30), Digihost Technology's WACC % is 55.21%. Digihost Technology's ROC % is -32.43% (calculated using TTM income statement data). Digihost Technology earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Digihost Technology ROC % Historical Data

The historical data trend for Digihost Technology'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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Digihost Technology ROC % Chart

Digihost Technology Annual Data

Trend

Dec19

Dec20

Dec21

Dec22

ROC %

-6.59

-52.09

8.27

-34.62

Digihost Technology Quarterly Data
	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23
ROC %	Get a 7-Day Free Trial											-175.48	-42.13	-30.64	-19.33	-37.98

Digihost Technology ROC % Calculation

Digihost Technology's annualized Return on Capital (ROC %) for the fiscal year that ended in Dec. 2022 is calculated as:

	ROC % (A: Dec. 2022 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2021 )	+	Invested Capital (A: Dec. 2022 ))	/ count )
=	-18.28 * ( 1 - -55.05% )	/	( (97.963	+	65.756)	/ 2 )
=	-28.34314	/	81.8595
=	-34.62 %

where

	Invested Capital		(A: Dec. 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	))
=	102.435	-	3.3	-	( 1.172	-	max(0, 7.064	-	46.356	+	1.172	))
=	97.963

	Invested Capital		(A: Dec. 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	))
=	71.457	-	3.186	-	( 2.515	-	max(0, 4.422	-	8.328	+	2.515	))
=	65.756

Digihost Technology's annualized Return on Capital (ROC %) for the quarter that ended in Sep. 2023 is calculated as:

	ROC % (Q: Sep. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jun. 2023 )	+	Invested Capital (Q: Sep. 2023 ))	/ count )
=	-23.884 * ( 1 - 0% )	/	( (64.827	+	60.954)	/ 2 )
=	-23.884	/	62.8905
=	-37.98 %

where

	Invested Capital		(Q: Jun. 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	))
=	67.518	-	5.252	-	( 0.388	-	max(0, 7.077	-	4.516	+	0.388	))
=	64.827

	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	))
=	64.061	-	6.161	-	( 1.172	-	max(0, 7.595	-	4.541	+	1.172	))
=	60.954

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

Digihost Technology (TSXV:DGHI) 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, Digihost Technology's WACC % is 55.21%. Digihost Technology's ROC % is -32.43% (calculated using TTM income statement data). Digihost Technology 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.

Digihost Technology ROC % Related Terms

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Digihost Technology (TSXV:DGHI) Business Description

Industry

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DGHI:USA 1NQ:Germany

Address

18 King Street East, Suite 902, Toronto, ON, CAN, M5C 1C4

Website

https://www.digihost.ca

Digihost Technology Inc is a blockchain company focused on Bitcoin mining. The company's mining facility is located in Buffalo, New York, and is equipped with an 18.7 MVA 115,000-kilovolt ampere outdoor substation with an option to increase the power output to 42MVA.