Tree Island Steel (Tree Island Steel) ROC % : 1.79% (As of Mar. 2024)

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What is Tree Island Steel 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 %. Tree Island Steel's annualized return on capital (ROC %) for the quarter that ended in Mar. 2024 was 1.79%.

As of today (2024-06-25), Tree Island Steel's WACC % is 6.91%. Tree Island Steel's ROC % is 2.89% (calculated using TTM income statement data). Tree Island Steel earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Tree Island Steel ROC % Historical Data

The historical data trend for Tree Island Steel'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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Tree Island Steel ROC % Chart

Tree Island Steel Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

ROC %

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1.48

6.52

29.99

25.49

7.91

Tree Island Steel Quarterly Data
	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23	Mar24
ROC %	Get a 7-Day Free Trial															17.73	9.93	6.64	-0.85	1.79

Tree Island Steel ROC % Calculation

Tree Island Steel's annualized Return on Capital (ROC %) for the fiscal year that ended in Dec. 2023 is calculated as:

	ROC % (A: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2022 )	+	Invested Capital (A: Dec. 2023 ))	/ count )
=	12.45 * ( 1 - 34.41% )	/	( (105.258	+	101.181)	/ 2 )
=	8.165955	/	103.2195
=	7.91 %

where

	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	))
=	129.795	-	13.513	-	( 11.024	-	max(0, 15.218	-	80.469	+	11.024	))
=	105.258

	Invested Capital		(A: 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	))
=	128.189	-	11.847	-	( 15.161	-	max(0, 12.42	-	76.419	+	15.161	))
=	101.181

Tree Island Steel's annualized Return on Capital (ROC %) for the quarter that ended in Mar. 2024 is calculated as:

	ROC % (Q: Mar. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Dec. 2023 )	+	Invested Capital (Q: Mar. 2024 ))	/ count )
=	4.248 * ( 1 - 57.39% )	/	( (101.181	+	100.958)	/ 2 )
=	1.8100728	/	101.0695
=	1.79 %

where

	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	))
=	128.189	-	11.847	-	( 15.161	-	max(0, 12.42	-	76.419	+	15.161	))
=	101.181

	Invested Capital		(Q: Mar. 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	))
=	128.567	-	12.682	-	( 14.927	-	max(0, 13.565	-	76.913	+	14.927	))
=	100.958

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

Tree Island Steel (OTCPK:TWIRF) 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, Tree Island Steel's WACC % is 6.91%. Tree Island Steel's ROC % is 2.89% (calculated using TTM income statement data). Tree Island Steel 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.

Tree Island Steel ROC % Related Terms

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Tree Island Steel (Tree Island Steel) Business Description

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GURUFOCUS.COM » STOCK LIST » Basic Materials » Steel » Tree Island Steel Ltd (OTCPK:TWIRF) » Definitions » ROC %

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TSL:Canada

Address

3933 Boundary Road, Richmond, BC, CAN, V6V 1T8

Website

https://www.treeisland.com

Tree Island Steel Ltd operates in the steel business. It is engaged in the manufacturing and sale of steel wire and related products for a range of applications. It offers products such as bulk nails, stucco reinforcing products, concrete reinforcing mesh, fencing, and other fabricated wire products. The firm groups its products into the following: Industrial, Commercial, Agricultural, Construction, and Residential Construction. Key revenue is derived from the Industrial segment. The products are offered under Tree Island, Halsteel, K-Lath, True spec, Toughstrand, and Stucco-rite brands. Geographically the firm has its business presence across the region of the United States, Canada, and other regions, of which the United States region accounts for the majority share of the revenue.

Tree Island Steel (Tree Island Steel) Headlines

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