ReadSoft AB (LTS:0GQO) ROIC % : 2.29% (As of Jun. 2014)

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What is ReadSoft AB 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 %. ReadSoft AB's annualized return on invested capital (ROIC %) for the quarter that ended in Jun. 2014 was 2.29%.

As of today (2024-06-23), ReadSoft AB's WACC % is 1.93%. ReadSoft AB's ROIC % is 3.25% (calculated using TTM income statement data). ReadSoft AB 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.

ReadSoft AB ROIC % Historical Data

The historical data trend for ReadSoft AB'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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ReadSoft AB ROIC % Chart

ReadSoft AB Annual Data

Trend

Dec04

Dec05

Dec06

Dec07

Dec08

Dec09

Dec10

Dec11

Dec12

Dec13

ROIC %

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1.52

7.14

10.58

8.16

0.68

ReadSoft AB Quarterly Data
	Sep09	Dec09	Mar10	Jun10	Sep10	Dec10	Mar11	Jun11	Sep11	Dec11	Mar12	Jun12	Sep12	Dec12	Mar13	Jun13	Sep13	Dec13	Mar14	Jun14
ROIC %	Get a 7-Day Free Trial															0.85	-2.40	10.74	-5.76	2.29

Competitive Comparison of ReadSoft AB's ROIC %

For the Software - Application subindustry, ReadSoft AB'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.

ReadSoft AB's ROIC % Distribution in the Software Industry

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

* The bar in red indicates where ReadSoft AB's ROIC % falls into.

ReadSoft AB ROIC % Calculation

ReadSoft AB'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 )
=	12.93 * ( 1 - 62.29% )	/	( (655.515	+	772.105)	/ 2 )
=	4.875903	/	713.81
=	0.68 %

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	))
=	809.844	-	43.803	-	( 114.392	-	max(0, 374.34	-	484.866	+	114.392	))
=	655.515

	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	))
=	827.327	-	27.398	-	( 60.449	-	max(0, 405.709	-	433.533	+	60.449	))
=	772.105

ReadSoft AB's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Jun. 2014 is calculated as:

	ROIC % (Q: Jun. 2014 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Mar. 2014 )	+	Invested Capital (Q: Jun. 2014 ))	/ count )
=	26.8 * ( 1 - 33.33% )	/	( (773.9	+	790)	/ 2 )
=	17.86756	/	781.95
=	2.29 %

where

	Invested Capital		(Q: Mar. 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	))
=	811	-	24.7	-	( 87.3	-	max(0, 399.7	-	412.1	+	87.3	))
=	773.9

	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	))
=	814.3	-	26.5	-	( 71.3	-	max(0, 417.1	-	414.9	+	71.3	))
=	790

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

ReadSoft AB (LTS:0GQO) 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, ReadSoft AB's WACC % is 1.93%. ReadSoft AB's ROIC % is 3.25% (calculated using TTM income statement data). ReadSoft AB 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. ReadSoft AB 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.

ReadSoft AB ROIC % Related Terms

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ReadSoft AB (LTS:0GQO) Business Description

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ReadSoft AB is a Sweden-based company that creates and markets software and services for document automation, processes such as data entry, information verification, document workflows, and e-voicing. The company operates in over 16 countries worldwide, with partnerships in an additional 70. The company offers solutions primarily for industries such as banking, manufacturing, service bureaus, market research, insurance, government, and medical. Major customers include IKEA, Audi, Porsche, Yves Rocher, Swedish Tax, DaimlerChrysler, HSBS Bank, Avon, Bosch, London Underground, New York Transit, Toyota, Volvo, Monoprix, Ericsson, and ING. The company is headquartered in Helsingborg, Sweden. The company offers ReadSoft DOCUMENTS, a complete software platform for document automation. The product incorporates five Automation Areas: Capture, capturing the information in any format and making it ready for electronic processing; Understand, enabling the computer to read, sort, interpret, extract, and index documents electronically; Manage, providing customers with control of electronic documents, including the verification and quality control with archiving and monitoring capabilities; Integrate, integration with the business software; and Interchange, Electronic Data Interchange. Capabilities within each Automation Area are customized to the needs of the customer, and solutions can be expanded to include any required extra capabilities. Also, this software can be integrated with systems such as SAP and Oracle E-Business Suite, Intentia, and IFS. ReadSoft business solutions for specific areas include: ReadSoft Documents for Mailrooms, Documents for EDI, Documents for Invoices, and Documents for Forms. Additionally, the company offers Professional Services such as project management and customization, Solution Optimization, Training, and Technical Support.

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