Shenzhen Fortune Trend Technology Co (SHSE:688318) ROIC % : 5.83% (As of Sep. 2024)

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What is Shenzhen Fortune Trend Technology Co 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 %. Shenzhen Fortune Trend Technology Co's annualized return on invested capital (ROIC %) for the quarter that ended in Sep. 2024 was 5.83%.

As of today (2024-12-12), Shenzhen Fortune Trend Technology Co's WACC % is 20.35%. Shenzhen Fortune Trend Technology Co's ROIC % is 11.78% (calculated using TTM income statement data). Shenzhen Fortune Trend Technology Co earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Shenzhen Fortune Trend Technology Co ROIC % Historical Data

The historical data trend for Shenzhen Fortune Trend Technology Co'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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Shenzhen Fortune Trend Technology Co ROIC % Chart

Shenzhen Fortune Trend Technology Co Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

ROIC %

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96.30

15.46

8.63

6.67

13.43

Shenzhen Fortune Trend Technology Co Quarterly Data
	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23	Mar24	Jun24	Sep24
ROIC %	Get a 7-Day Free Trial															9.34	25.72	9.14	7.28	5.83

Competitive Comparison of Shenzhen Fortune Trend Technology Co's ROIC %

For the Software - Application subindustry, Shenzhen Fortune Trend Technology 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.

Shenzhen Fortune Trend Technology Co's ROIC % Distribution in the Software Industry

For the Software industry and Technology sector, Shenzhen Fortune Trend Technology Co's ROIC % distribution charts can be found below:

* The bar in red indicates where Shenzhen Fortune Trend Technology Co's ROIC % falls into.

Shenzhen Fortune Trend Technology Co ROIC % Calculation

Shenzhen Fortune Trend Technology Co'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 )
=	292.93 * ( 1 - 13.1% )	/	( (2550.873	+	1241.287)	/ 2 )
=	254.55617	/	1896.08
=	13.43 %

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	))
=	3367.69	-	40.823	-	( 775.994	-	max(0, 189.203	-	2941.524	+	775.994	))
=	2550.873

	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	))
=	3635.885	-	60.916	-	( 2333.682	-	max(0, 196.657	-	3338.691	+	2333.682	))
=	1241.287

Shenzhen Fortune Trend Technology Co's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Sep. 2024 is calculated as:

	ROIC % (Q: Sep. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jun. 2024 )	+	Invested Capital (Q: Sep. 2024 ))	/ count )
=	112.972 * ( 1 - 8.11% )	/	( (1746.094	+	1816.567)	/ 2 )
=	103.8099708	/	1781.3305
=	5.83 %

where

	Invested Capital		(Q: Jun. 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	))
=	3702.892	-	25.315	-	( 1931.483	-	max(0, 262.381	-	2779.729	+	1931.483	))
=	1746.094

	Invested Capital		(Q: Sep. 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	))
=	3694.41	-	29.689	-	( 1848.154	-	max(0, 209.292	-	2174.717	+	1848.154	))
=	1816.567

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

Shenzhen Fortune Trend Technology Co (SHSE:688318) 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, Shenzhen Fortune Trend Technology Co's WACC % is 20.35%. Shenzhen Fortune Trend Technology Co's ROIC % is 11.78% (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.

Shenzhen Fortune Trend Technology Co ROIC % Related Terms

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Shenzhen Fortune Trend Technology Co Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Technology » Software » Shenzhen Fortune Trend Technology Co Ltd (SHSE:688318) » Definitions » ROIC %

Comparable Companies

Traded in Other Exchanges

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Address

No. 10 Kaifeng Road, Meilin Street, Room 808, 8th Floor, Huachao Building, Meilin Community, Guangdong, Futian District, Shenzhen, CHN, 518049

Website

https://www.tdx.com.cn

Shenzhen Fortune Trend Technology Co Ltd is engaged in research and development of securities analysis systems and computer communication systems. It provides securities investment analysis system for securities institutions and investors under the brand Tongdaxin. Tongdaxin's well-known online trading products are: China Merchants Securities Zhiyuan One Account, Guoxin Securities Golden Sun Edition, CITIC Securities Zhixin All-rounder, GF Securities Financial Terminal, Galaxy Securities Neptune, Guotai Junan Securities Fuyi, among others.

Executives

Wu Huo Sheng	Core technical personnel
Shen Zhi Kun	Core technical personnel
Bao Wei	Core technical personnel
Sun Kui	Core technical personnel
Tian Jin En	Directors, senior managers, core technical personnel
Chen Fan	Supervisors, core technical personnel
Qin Tao	senior management
Huang Shan	Directors, senior managers, core technical personnel
Huang Qing	Director
Zhang Li Jun	Directors, senior managers, core technical personnel

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