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 Okomu Oil Palm Co's annualized return on invested capital (ROIC %) for the quarter that ended in Sep. 2024 was 35.46%.
As of today (2024-12-12), The Okomu Oil Palm Co's WACC % is 10.26%. The Okomu Oil Palm Co's ROIC % is 29.99% (calculated using TTM income statement data).
The Okomu Oil Palm Co 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 The Okomu Oil Palm Co's ROIC %
For the Farm Products subindustry, The Okomu Oil Palm Co'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.
The Okomu Oil Palm Co's ROIC % Distribution in the Consumer Packaged Goods Industry
For the Consumer Packaged Goods industry and Consumer Defensive sector, The Okomu Oil Palm Co's ROIC % distribution charts can be found below:
* The bar in red indicates where The Okomu Oil Palm Co's ROIC % falls into.
The Okomu Oil Palm Co ROIC % Calculation
The Okomu Oil Palm Co'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.
The Okomu Oil Palm Co (NSA:OKMO) 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, The Okomu Oil Palm Co's WACC % is 10.26%. The Okomu Oil Palm Co's ROIC % is 29.99% (calculated using TTM income statement data).
The Okomu Oil Palm Co 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.
The Okomu Oil Palm Co 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.
The Okomu Oil Palm Co ROIC % Related Terms
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The Okomu Oil Palm Co PLC engages in the cultivation of oil palm and rubber in Nigeria. The company has three reportable segments; the Palm Plantation segment, which produces fresh fruit bunches, crude palm oil, and crude palm kernel; the Rubber Plantation segment, which produces latex and rubber cake; and the Palm Processing segment, which renders palm processing from the company's mill processing equipment. The company processes fresh fruit bunches into crude palm oil for resale, and rubber lumps to rubber cake for export. The company generates maximum revenue from Palm oil products and Rubber products.
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