Life Insurance Nepal (XNEP:LICN) ROC % : 0.25% (As of Oct. 2024)

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What is Life Insurance Nepal 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 %. Life Insurance Nepal's annualized return on capital (ROC %) for the quarter that ended in Oct. 2024 was 0.25%.

As of today (2025-03-25), Life Insurance Nepal's WACC % is 10.32%. Life Insurance Nepal's ROC % is 0.15% (calculated using TTM income statement data). Life Insurance Nepal earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Life Insurance Nepal ROC % Historical Data

The historical data trend for Life Insurance Nepal'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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Life Insurance Nepal ROC % Chart

Life Insurance Nepal Annual Data

Trend

Jul14

Jul15

Jul16

Jul17

Jul18

Jul19

Jul20

Jul21

Jul22

Jul23

ROC %

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23.29

22.28

18.16

1.10

0.72

Life Insurance Nepal Quarterly Data
	Oct19	Jan20	Apr20	Jul20	Oct20	Jan21	Apr21	Jul21	Oct21	Jan22	Apr22	Jul22	Oct22	Jan23	Apr23	Jul23	Oct23	Jan24	Apr24	Oct24
ROC %	Get a 7-Day Free Trial															2.54	0.20	0.26	0.10	0.25

Life Insurance Nepal ROC % Calculation

Life Insurance Nepal's annualized Return on Capital (ROC %) for the fiscal year that ended in Jul. 2023 is calculated as:

	ROC % (A: Jul. 2023 )
=	NOPAT	/	Average Invested Capital
=	EBIT * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Jul. 2022 )	+	Invested Capital (A: Jul. 2023 ))	/ count )
=	2762.431 * ( 1 - 72.49% )	/	( (98827.4788	+	113013.28945)	/ 2 )
=	759.9447681	/	105920.384125
=	0.72 %

where

	Invested Capital		(A: Jul. 2022 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Balance Sheet Cash And Cash Equivalents	-	5% * Revenue )
=	99461.744	-	7.879	-	( 1978.527	-	5% * 27042.816 )
=	98827.4788

	Invested Capital		(A: Jul. 2023 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Balance Sheet Cash And Cash Equivalents	-	5% * Revenue )
=	114431.009	-	382.725	-	( 2449.594	-	5% * 28291.989 )
=	113013.28945

Life Insurance Nepal's annualized Return on Capital (ROC %) for the quarter that ended in Oct. 2024 is calculated as:

	ROC % (Q: Oct. 2024 )
=	NOPAT	/	Average Invested Capital
=	EBIT * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Apr. 2024 )	+	Invested Capital (Q: Oct. 2024 ))	/ count )
=	3018.488 * ( 1 - 89.49% )	/	( (123988.0648	+	130086.0308)	/ 2 )
=	317.2430888	/	127037.0478
=	0.25 %

where

	Invested Capital		(Q: Apr. 2024 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Balance Sheet Cash And Cash Equivalents	-	5% * Revenue )
=	123946.503	-	47.8	-	( 269.503	-	5% * 7177.296 )
=	123988.0648

	Invested Capital		(Q: Oct. 2024 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Balance Sheet Cash And Cash Equivalents	-	5% * Revenue )
=	132768.395	-	407.959	-	( 2662.008	-	5% * 7752.056 )
=	130086.0308

Note: The EBIT data used here is four times the quarterly (Oct. 2024) data.

Life Insurance Nepal (XNEP:LICN) 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, Life Insurance Nepal's WACC % is 10.32%. Life Insurance Nepal's ROC % is 0.15% (calculated using TTM income statement data). Life Insurance Nepal 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.

Life Insurance Nepal ROC % Related Terms

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Life Insurance Nepal Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Insurance » Life Insurance Corp Nepal Ltd (XNEP:LICN) » Definitions » ROC %

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Traded in Other Exchanges

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Address

Star Mall, PO Box No 21905, 4th Floor, Putalisadak, Kathmandu, NPL

Website

https://www.licnepal.com.np

Life Insurance Corp Nepal Ltd is operative in the field of financial services. A joint venture between Life Insurance Corporation of India and Vishal Group of Nepal, it is one of Nepal's most capitalized insurance companies. It offers a range of life insurance products such as endowment plans, child plans, money-back plans, and services like reviving a lapsed policy, policy loans, nominations, and bonuses to policyholders. The company's majority source of revenue is through insurance premiums, which are received either by direct remittance of cheques or bank drafts.