Allied Digital Services (NSE:ADSL) ROIC % : 11.94% (As of Mar. 2024)

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What is Allied Digital Services 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 %. Allied Digital Services's annualized return on invested capital (ROIC %) for the quarter that ended in Mar. 2024 was 11.94%.

As of today (2024-06-17), Allied Digital Services's WACC % is 12.70%. Allied Digital Services's ROIC % is 9.18% (calculated using TTM income statement data). Allied Digital Services earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Allied Digital Services ROIC % Historical Data

The historical data trend for Allied Digital Services'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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Allied Digital Services ROIC % Chart

Allied Digital Services Annual Data

Trend

Mar15

Mar16

Mar17

Mar18

Mar19

Mar20

Mar21

Mar22

Mar23

Mar24

ROIC %

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3.97

3.56

7.49

9.12

9.00

Allied Digital Services Quarterly Data
	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23	Mar24
ROIC %	Get a 7-Day Free Trial															7.14	6.59	9.44	9.39	11.94

Competitive Comparison of Allied Digital Services's ROIC %

For the Information Technology Services subindustry, Allied Digital Services'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.

Allied Digital Services's ROIC % Distribution in the Software Industry

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

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

Allied Digital Services ROIC % Calculation

Allied Digital Services's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Mar. 2024 is calculated as:

	ROIC % (A: Mar. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Mar. 2023 )	+	Invested Capital (A: Mar. 2024 ))	/ count )
=	670.2 * ( 1 - 27.2% )	/	( (5729.8	+	5113.3)	/ 2 )
=	487.9056	/	5421.55
=	9.00 %

where

	Invested Capital		(A: Mar. 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	))
=	6948.7	-	372.7	-	( 846.2	-	max(0, 1087.3	-	3836.7	+	846.2	))
=	5729.8

	Invested Capital		(A: Mar. 2024 )
=	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	))
=	7780.4	-	507.3	-	( 2159.8	-	max(0, 1243	-	4478.5	+	2159.8	))
=	5113.3

Allied Digital Services's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Mar. 2024 is calculated as:

	ROIC % (Q: Mar. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Dec. 2023 )	+	Invested Capital (Q: Mar. 2024 ))	/ count )
=	813.6 * ( 1 - 24.93% )	/	( (0	+	5113.3)	/ 1 )
=	610.76952	/	5113.3
=	11.94 %

where

	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	))
=	0	-	0	-	( 0	-	max(0, 0	-	0	+	0	))
=	0

	Invested Capital		(Q: Mar. 2024 )
=	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	))
=	7780.4	-	507.3	-	( 2159.8	-	max(0, 1243	-	4478.5	+	2159.8	))
=	5113.3

Note: The Operating Income data used here is four times the quarterly (Mar. 2024) data.

Allied Digital Services (NSE:ADSL) 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, Allied Digital Services's WACC % is 12.70%. Allied Digital Services's ROIC % is 9.18% (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.

Allied Digital Services ROIC % Related Terms

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Allied Digital Services (NSE:ADSL) Business Description

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GURUFOCUS.COM » STOCK LIST » Technology » Software » Allied Digital Services Ltd (NSE:ADSL) » Definitions » ROIC %

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532875:India

Address

NCPA Road, Block No. III, Nariman Point, Premises No. 13A, 13th Floor, Earnest House, Backbay Reclamation, Mumbai, MH, IND, 400 021

Website

https://www.allieddigital.net

Allied Digital Services Ltd is an Indian-based information technology service and solutions offering company. The company provides a wide range of information technology and consultancy services such as infrastructure services, end-user IT support, IT asset lifecycle, enterprise applications, and integrated solutions. The business activity of the firm is operated through the Enterprise Computing based Solutions and Infrastructure Management based Solutions segments. Geographically the business presence of the firm is seen across the region of India, the United States, the UK, Singapore, Australia, Ireland, Brazil, Japan, and China.

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