Espressif Systems (Shanghai) Co (SHSE:688018) ROIC % : 18.89% (As of Dec. 2024)

Espressif Systems (Shanghai) Co ROIC % Chart

Espressif Systems (Shanghai) Co Annual Data
	Trend	Dec16	Dec17	Dec18	Dec19	Dec20	Dec21	Dec22	Dec23	Dec24
ROIC %		Get a 7-Day Free Trial				24.60	30.01	7.99	7.18	20.13

Espressif Systems (Shanghai) Co Quarterly Data
	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23	Mar24	Jun24	Sep24	Dec24
ROIC %	Get a 7-Day Free Trial															8.18	12.55	26.09	22.86	18.89

Competitive Comparison of Espressif Systems (Shanghai) Co's ROIC %

For the Semiconductors subindustry, Espressif Systems (Shanghai) 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.

Espressif Systems (Shanghai) Co's ROIC % Distribution in the Semiconductors Industry

For the Semiconductors industry and Technology sector, Espressif Systems (Shanghai) Co's ROIC % distribution charts can be found below:

* The bar in red indicates where Espressif Systems (Shanghai) Co's ROIC % falls into.

Espressif Systems (Shanghai) Co ROIC % Calculation

Espressif Systems (Shanghai) Co's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Dec. 2024 is calculated as:

where

Espressif Systems (Shanghai) Co's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Dec. 2024 is calculated as:

where

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

Espressif Systems (Shanghai) Co  (SHSE:688018) 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, Espressif Systems (Shanghai) Co's WACC % is 10.29%. Espressif Systems (Shanghai) Co's ROIC % is 20.16% (calculated using TTM income statement data). Espressif Systems (Shanghai) 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. Espressif Systems (Shanghai) 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.

Espressif Systems (Shanghai) Co ROIC % Related Terms

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Espressif Systems (Shanghai) Co Business Description