ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Henkel AG KGaA's annualized return on invested capital (ROIC %) for the quarter that ended in Jun. 2024 was 8.05%.
As of today (2024-12-14), Henkel AG KGaA's WACC % is 3.14%. Henkel AG KGaA's ROIC % is 7.66% (calculated using TTM income statement data).
Henkel AG KGaA 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.
Henkel AG KGaA ROIC % Historical Data
The historical data trend for Henkel AG KGaA'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.
For the Household & Personal Products subindustry, Henkel AG KGaA'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.
Henkel AG KGaA's ROIC % Distribution in the Consumer Packaged Goods Industry
For the Consumer Packaged Goods industry and Consumer Defensive sector, Henkel AG KGaA's ROIC % distribution charts can be found below:
* The bar in red indicates where Henkel AG KGaA's ROIC % falls into.
Henkel AG KGaA ROIC % Calculation
Henkel AG KGaA'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 two times the semi-annual (Jun. 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.
Henkel AG KGaA (MIL:1HEN3) 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, Henkel AG KGaA's WACC % is 3.14%. Henkel AG KGaA's ROIC % is 7.66% (calculated using TTM income statement data).
Henkel AG KGaA 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.
Henkel AG KGaA 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.
Henkel AG KGaA ROIC % Related Terms
Thank you for viewing the detailed overview of Henkel AG KGaA's ROIC % provided by GuruFocus.com. Please click on the following links to see related term pages.
Two distinct customer groups constitute Henkel. The consumer segment (around 50% of consolidated 2023 sales) is laundry and home care, including the Persil and Purex laundry detergent brands, and beauty care, including the Schwarzkopf brand in hair care and the Dial brand in hand soap. The adhesives technologies segment makes up the remaining 50% of sales. Sales from Europe accounted for 38% of the firm's consolidated total in 2023, while Asia-Pacific and North America accounted for 15% and 28%, respectively.
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