ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Nova Pharma Solutions Bhd's annualized return on invested capital (ROIC %) for the quarter that ended in Dec. 2023 was 53.58%.
As of today (2024-05-26), Nova Pharma Solutions Bhd's WACC % is 1.89%. Nova Pharma Solutions Bhd's ROIC % is 73.72% (calculated using TTM income statement data).
Nova Pharma Solutions Bhd 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.
* 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 Nova Pharma Solutions Bhd's ROIC %
For the Engineering & Construction subindustry, Nova Pharma Solutions Bhd'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.
Nova Pharma Solutions Bhd's ROIC % Distribution in the Construction Industry
For the Construction industry and Industrials sector, Nova Pharma Solutions Bhd's ROIC % distribution charts can be found below:
* The bar in red indicates where Nova Pharma Solutions Bhd's ROIC % falls into.
Nova Pharma Solutions Bhd ROIC % Calculation
Nova Pharma Solutions Bhd's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Dec. 2023 is calculated as:
Note:
The Operating Income data used here is two times the semi-annual (Dec. 2023) 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.
Nova Pharma Solutions Bhd (XKLS:03006) 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, Nova Pharma Solutions Bhd's WACC % is 1.89%. Nova Pharma Solutions Bhd's ROIC % is 73.72% (calculated using TTM income statement data).
Nova Pharma Solutions Bhd 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.
Nova Pharma Solutions Bhd 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.
Nova Pharma Solutions Bhd ROIC % Related Terms
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Nova Pharma Solutions Bhd (XKLS:03006) Business Description
Nova Pharma Solutions Bhd provides engineering solutions to pharma and biotech industries. The company's reportable segments include Design fee, Post Design, & Other support fees. Design fee comprises conceptual designs which include user requirement specification, capacity analysis and process scheduling with detailed costing, list of deliverables, details specification of various equipment and processes. Post design fee comprise tendering and procurement support as well as the construction of a plant, & Other support fees comprise of services to assist a customer in the good manufacturing practice document review & gap analysis and assessment. It generates a majority of its revenue from the Design fee segment. Geographically, the company generates a majority of its revenue from Malaysia.
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