Digital River (FRA:RIV) ROIC % : 7.39% (As of Sep. 2014)

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What is Digital River ROIC %?

ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Digital River's annualized return on invested capital (ROIC %) for the quarter that ended in Sep. 2014 was 7.39%.

As of today (2024-06-19), Digital River's WACC % is 0.00%. Digital River's ROIC % is 0.00% (calculated using TTM income statement data). Digital River earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Digital River ROIC % Historical Data

The historical data trend for Digital River's ROIC % 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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Digital River ROIC % Chart

Digital River Annual Data

Trend

Dec04

Dec05

Dec06

Dec07

Dec08

Dec09

Dec10

Dec11

Dec12

Dec13

ROIC %

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8.26

3.09

4.43

-48.03

-10.10

Digital River Quarterly Data
	Dec09	Mar10	Jun10	Sep10	Dec10	Mar11	Jun11	Sep11	Dec11	Mar12	Jun12	Sep12	Dec12	Mar13	Jun13	Sep13	Dec13	Mar14	Jun14	Sep14
ROIC %	Get a 7-Day Free Trial															-7.19	0.12	3.35	-9.03	7.39

Competitive Comparison of Digital River's ROIC %

For the Software - Application subindustry, Digital River'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.

Digital River's ROIC % Distribution in the Software Industry

For the Software industry and Technology sector, Digital River's ROIC % distribution charts can be found below:

* The bar in red indicates where Digital River's ROIC % falls into.

Digital River ROIC % Calculation

Digital River's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Dec. 2013 is calculated as:

	ROIC % (A: Dec. 2013 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2012 )	+	Invested Capital (A: Dec. 2013 ))	/ count )
=	-22.138 * ( 1 - 4.67% )	/	( (206.378	+	211.41)	/ 2 )
=	-21.1041554	/	208.894
=	-10.10 %

where

	Invested Capital		(A: Dec. 2012 )
=	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	))
=	801.84	-	200.344	-	( 537.701	-	max(0, 214.991	-	610.109	+	537.701	))
=	206.378

	Invested Capital		(A: Dec. 2013 )
=	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	))
=	716.257	-	191.497	-	( 437.65	-	max(0, 197.462	-	510.812	+	437.65	))
=	211.41

Digital River's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Sep. 2014 is calculated as:

	ROIC % (Q: Sep. 2014 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jun. 2014 )	+	Invested Capital (Q: Sep. 2014 ))	/ count )
=	-18.34 * ( 1 - 194.02% )	/	( (230.724	+	236.06)	/ 2 )
=	17.243268	/	233.392
=	7.39 %

where

	Invested Capital		(Q: Jun. 2014 )
=	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	))
=	547.134	-	134.509	-	( 288.578	-	max(0, 168.465	-	350.366	+	288.578	))
=	230.724

	Invested Capital		(Q: Sep. 2014 )
=	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	))
=	569.877	-	142.379	-	( 299.403	-	max(0, 178.611	-	370.049	+	299.403	))
=	236.06

Note: The Operating Income data used here is four times the quarterly (Sep. 2014) data.

Digital River (FRA:RIV) 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, Digital River's WACC % is 0.00%. Digital River's ROIC % is 0.00% (calculated using TTM income statement data).

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.

Digital River ROIC % Related Terms

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Digital River (FRA:RIV) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Technology » Software » Digital River Inc (FRA:RIV) » Definitions » ROIC %

Traded in Other Exchanges

N/A

Address

Website

http://www.digitalriver.com

Digital River, Inc., was incorporated in Delaware in February 1994. The Company provides end-to-end e-commerce and marketing solutions to a variety of companies in software, consumer electronics, computer games, video games, and other markets. It offers its clients, services that enables them to quickly and cost effectively establish an online sales channel capability and to subsequently manage and grow online sales while mitigating risks. Its services include design, development and hosting of online stores and shopping carts, store merchandising and optimization, order management, denied parties screening, export controls and management, tax compliance and management, fraud management, digital product delivery via download, physical product fulfillment, subscription management, online marketing including e-mail marketing, management of affiliate programs, paid search programs, payment processing services, website optimization, web analytics and reporting, and CD production and delivery. Its products and services allow its clients to focus on promoting and marketing their products and brands while leveraging its investments in technology and infrastructure to facilitate the purchase of products through their online websites. Shoppers could browse for products and make purchases online. The Company typically is the seller of record for transactions through its client branded stores. It also processes the buyer's payment as the merchant of record, including collection and remittance of applicable taxes. The Company's e-commerce store solutions range from simple remote control models to more comprehensive online store models. In addition to the services the Company provides, that facilitate the completion of an online transaction, it also offers services designed to increase traffic to its clients' websites and the associated online stores and to improve the sales productivity of those stores. The Company's services include paid search advertising, search engine optimization affiliate marketing, store optimization, multi-variant testing, web analytic services and e-mail optimization. All of the services are designed to help its clients acquire customers more effectively, sell to those customers more often and more efficiently, and increase the lifetime value of each customer. The Company sells its products and services to consumers through the Internet. It sells and markets its services for clients through a direct sales force located in offices in the United States, Europe and Asia Pacific. Some of the competitors of the Company are Art Technology Group, Inc., IBM Corporation, IBM Global Services, Accenture, Inc., GSI Commerce, Inc., asknet Inc., Arvato, ValueClick, Inc. and aQuantive, Inc. The Company is subject to a number of foreign and domestic laws and regulations that affect companies conducting business on the internet.