ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Mercedes-Benz Group AG's annualized return on invested capital (ROIC %) for the quarter that ended in Sep. 2024 was 2.46%.
As of today (2024-12-15), Mercedes-Benz Group AG's WACC % is 2.52%. Mercedes-Benz Group AG's ROIC % is 4.15% (calculated using TTM income statement data).
Mercedes-Benz Group AG generates higher returns on investment than it costs the company to raise the capital needed for that investment. It 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.
* 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.
Competitive Comparison of Mercedes-Benz Group AG's ROIC %
For the Auto Manufacturers subindustry, Mercedes-Benz Group AG's ROIC %, along with its competitors' market caps and ROIC % data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Mercedes-Benz Group AG's ROIC % Distribution in the Vehicles & Parts Industry
For the Vehicles & Parts industry and Consumer Cyclical sector, Mercedes-Benz Group AG's ROIC % distribution charts can be found below:
* The bar in red indicates where Mercedes-Benz Group AG's ROIC % falls into.
Mercedes-Benz Group AG ROIC % Calculation
Mercedes-Benz Group AG's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Dec. 2023 is calculated as:
Note:
The Operating Income data used here is four times the quarterly (Sep. 2024) data.
* 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.
Mercedes-Benz Group AG (CHIX:MBGd) ROIC % Explanation
ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. 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 ROIC % 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, Mercedes-Benz Group AG's WACC % is 2.52%. Mercedes-Benz Group AG's ROIC % is 4.15% (calculated using TTM income statement data).
Mercedes-Benz Group AG generates higher returns on investment than it costs the company to raise the capital needed for that investment. It 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.
Mercedes-Benz Group AG 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 %, ROIC % 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.
Mercedes-Benz Group AG ROIC % Related Terms
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Mercedes-Benz Group is a premium automotive original equipment manufacturer, selling around 2 million passenger cars, including its Chinese joint venture, and just under 450,000 vans per year. The company's financial profile improved significantly following the spinoff of Daimler Truck in 2021. Unlike most automotive OEMs, Mercedes operates under its own brand alone. In 2023, 16% of its passenger cars sold were top end (G Class, Maybach, AMG, S Class), 54% were core (C and E Class), and 30% entry (A and B Class). In volume terms, Asia is Mercedes' largest market at 40% of 2023 vehicle sales followed by Europe at 38% and North America at 17%.
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