GungHo Online Entertainment (TSE:3765) ROIC % : 92.20% (As of Mar. 2024)

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What is GungHo Online Entertainment 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 %. GungHo Online Entertainment's annualized return on invested capital (ROIC %) for the quarter that ended in Mar. 2024 was 92.20%.

As of today (2024-05-19), GungHo Online Entertainment's WACC % is 1.00%. GungHo Online Entertainment's ROIC % is 95.59% (calculated using TTM income statement data). GungHo Online Entertainment 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.

GungHo Online Entertainment ROIC % Historical Data

The historical data trend for GungHo Online Entertainment'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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GungHo Online Entertainment ROIC % Chart

GungHo Online Entertainment Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

ROIC %

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135.40

128.90

155.91

132.82

105.12

GungHo Online Entertainment 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															139.87	133.63	90.15	65.22	92.20

Competitive Comparison of GungHo Online Entertainment's ROIC %

For the Electronic Gaming & Multimedia subindustry, GungHo Online Entertainment'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.

GungHo Online Entertainment's ROIC % Distribution in the Interactive Media Industry

For the Interactive Media industry and Communication Services sector, GungHo Online Entertainment's ROIC % distribution charts can be found below:

* The bar in red indicates where GungHo Online Entertainment's ROIC % falls into.

GungHo Online Entertainment ROIC % Calculation

GungHo Online Entertainment'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 )
=	27881 * ( 1 - 25.47% )	/	( (18493	+	21042)	/ 2 )
=	20779.7093	/	19767.5
=	105.12 %

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	))
=	152210	-	9853	-	( 127208	-	max(0, 17924	-	141788	+	127208	))
=	18493

	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	))
=	168045	-	8529	-	( 140033	-	max(0, 17493	-	155967	+	140033	))
=	21042

GungHo Online Entertainment'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 )
=	25064 * ( 1 - 24.67% )	/	( (21042	+	19916)	/ 2 )
=	18880.7112	/	20479
=	92.20 %

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	))
=	168045	-	8529	-	( 140033	-	max(0, 17493	-	155967	+	140033	))
=	21042

	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	))
=	167582	-	8894	-	( 140108	-	max(0, 16820	-	155592	+	140108	))
=	19916

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

GungHo Online Entertainment (TSE:3765) 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, GungHo Online Entertainment's WACC % is 1.00%. GungHo Online Entertainment's ROIC % is 95.59% (calculated using TTM income statement data). GungHo Online Entertainment 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. GungHo Online Entertainment 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.

GungHo Online Entertainment ROIC % Related Terms

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GungHo Online Entertainment (TSE:3765) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Communication Services » Interactive Media » GungHo Online Entertainment Inc (TSE:3765) » Definitions » ROIC %

Comparable Companies

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GUNGF:USA G03:Germany

Address

1-11-1, Pacific Century Place Marunouchi, Marunouchi, Chiyodaku, Tokyo, JPN, 100-6221

Website

http://www.gungho.co.jp

GungHo Online Entertainment, Inc. is a Japanese company that plans, develops, and distributes online video games. These games include smartphone platforms, online computer games, and console games. The company operates through its Personal Computer (PC) online segment, which is involved with distributing, operating, and licensing online games, and Mobile Consumer segment, which is involved with planning, development, and delivery of smartphone, consoles, and portable gaming machines.

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