MEDIROM Healthcare Technologies (MEDIROM Healthcare Technologies) ROIC % : -2.57% (As of Dec. 2023)

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What is MEDIROM Healthcare Technologies 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 %. MEDIROM Healthcare Technologies's annualized return on invested capital (ROIC %) for the quarter that ended in Dec. 2023 was -2.57%.

As of today (2024-06-23), MEDIROM Healthcare Technologies's WACC % is 1.25%. MEDIROM Healthcare Technologies's ROIC % is -41.81% (calculated using TTM income statement data). MEDIROM Healthcare Technologies earns returns that do not match up to its cost of capital. It will destroy value as it grows.

MEDIROM Healthcare Technologies ROIC % Historical Data

The historical data trend for MEDIROM Healthcare Technologies'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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MEDIROM Healthcare Technologies ROIC % Chart

MEDIROM Healthcare Technologies Annual Data

Trend

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

ROIC %

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0.79

-9.01

-14.85

1.39

-29.46

MEDIROM Healthcare Technologies Semi-Annual Data
	Dec18	Jun19	Dec19	Jun20	Dec20	Jun21	Dec21	Jun22	Dec22	Jun23	Dec23
ROIC %	Get a 7-Day Free Trial						-29.26	-4.52	7.89	-9.12	-2.57

Competitive Comparison of MEDIROM Healthcare Technologies's ROIC %

For the Personal Services subindustry, MEDIROM Healthcare Technologies'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.

MEDIROM Healthcare Technologies's ROIC % Distribution in the Personal Services Industry

For the Personal Services industry and Consumer Cyclical sector, MEDIROM Healthcare Technologies's ROIC % distribution charts can be found below:

* The bar in red indicates where MEDIROM Healthcare Technologies's ROIC % falls into.

MEDIROM Healthcare Technologies ROIC % Calculation

MEDIROM Healthcare Technologies's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Dec. 2023 is calculated as:

	ROIC % (A: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2022 )	+	Invested Capital (A: Dec. 2023 ))	/ count )
=	-2.571 * ( 1 - -458.74% )	/	( (47.253	+	50.261)	/ 2 )
=	-14.3652054	/	48.757
=	-29.46 %

where

	Invested Capital		(A: Dec. 2022 )
=	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	))
=	50.012	-	12.238	-	( 4.684	-	max(0, 26.995	-	17.516	+	4.684	))
=	47.253

	Invested Capital		(A: Dec. 2023 )
=	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	))
=	47.57	-	9.824	-	( 0.923	-	max(0, 24.73	-	12.215	+	0.923	))
=	50.261

MEDIROM Healthcare Technologies's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Dec. 2023 is calculated as:

	ROIC % (Q: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jun. 2023 )	+	Invested Capital (Q: Dec. 2023 ))	/ count )
=	-0.984 * ( 1 - -26.4% )	/	( (46.59	+	50.261)	/ 2 )
=	-1.243776	/	48.4255
=	-2.57 %

where

	Invested Capital		(Q: Jun. 2023 )
=	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	))
=	42.86	-	8.347	-	( 0.833	-	max(0, 23.134	-	11.057	+	0.833	))
=	46.59

	Invested Capital		(Q: Dec. 2023 )
=	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	))
=	47.57	-	9.824	-	( 0.923	-	max(0, 24.73	-	12.215	+	0.923	))
=	50.261

Note: The Operating Income data used here is two times the semi-annual (Dec. 2023) data.

MEDIROM Healthcare Technologies (NAS:MRM) 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, MEDIROM Healthcare Technologies's WACC % is 1.25%. MEDIROM Healthcare Technologies's ROIC % is -41.81% (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.

MEDIROM Healthcare Technologies ROIC % Related Terms

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MEDIROM Healthcare Technologies (MEDIROM Healthcare Technologies) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Cyclical » Personal Services » MEDIROM Healthcare Technologies Inc (NAS:MRM) » Definitions » ROIC %

Comparable Companies

Traded in Other Exchanges

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Address

2-3-1 Daiba, Minato-ku, 16th Floor Tradepia Odaiba, Tokyo, JPN, 135-0091

Website

https://www.medirom.co.jp

MEDIROM Healthcare Technologies Inc provides health services. The company is a franchiser and operator of healthcare salons and operates in segments namely Relaxation Salon, Digital Preventative Healthcare, and Luxury Beauty Segment. The company generates a majority of its revenue from the Relaxation Salon business segment. Geographically, the company generates a maximum share of its revenue from Japan.