ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Soon Lian Holdings's annualized return on invested capital (ROIC %) for the quarter that ended in Dec. 2024 was 22.48%.
As of today (2025-03-17), Soon Lian Holdings's WACC % is 13.09%. Soon Lian Holdings's ROIC % is 17.15% (calculated using TTM income statement data).
Soon Lian Holdings 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.
Soon Lian Holdings ROIC % Historical Data
The historical data trend for Soon Lian Holdings'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.
Competitive Comparison of Soon Lian Holdings's ROIC %
For the Aluminum subindustry, Soon Lian Holdings'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.
Soon Lian Holdings's ROIC % Distribution in the Metals & Mining Industry
For the Metals & Mining industry and Basic Materials sector, Soon Lian Holdings's ROIC % distribution charts can be found below:
* The bar in red indicates where Soon Lian Holdings's ROIC % falls into.
Soon Lian Holdings ROIC % Calculation
Soon Lian Holdings's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Dec. 2024 is calculated as:
Note:
The Operating Income data used here is two times the semi-annual (Dec. 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.
Soon Lian Holdings (SGX:5MD) 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, Soon Lian Holdings's WACC % is 13.09%. Soon Lian Holdings's ROIC % is 17.15% (calculated using TTM income statement data).
Soon Lian Holdings 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.
Soon Lian Holdings 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.
Soon Lian Holdings ROIC % Related Terms
Thank you for viewing the detailed overview of Soon Lian Holdings's ROIC % provided by GuruFocus.com. Please click on the following links to see related term pages.
Soon Lian Holdings Ltd acts as a specialist supplier of aluminum alloy products. The business divisions of the company include Marine, Precision Engineering, Stockists & traders, and Others customers. The Marine division includes products used in shipbuilding - hulls, decks, superstructures, and cabins of light crafts. The Precision Engineering division includes precision parts for electronic equipment, precision instruments, medical instrumentation, automated assembly lines, pharmaceutical machinery, and robotics. Stockists segment and other customer divisions include high-strength items in aircraft industries, oil tankers, automotive parts, and towers. Its geographical segments are Singapore, Malaysia, China, Taiwan, Indonesia and other countries, of which Malaysia gives maximum revenue.
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