ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Life Insurance Nepal's annualized return on invested capital (ROIC %) for the quarter that ended in Apr. 2024 was 0.10%.
As of today (2024-06-24), Life Insurance Nepal's WACC % is 10.26%. Life Insurance Nepal's ROIC % is 0.09% (calculated using TTM income statement data).
Life Insurance Nepal earns returns that do not match up to its cost of capital. It will destroy value as it grows.
* 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 Life Insurance Nepal's ROIC %
For the Insurance - Life subindustry, Life Insurance Nepal'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.
Life Insurance Nepal's ROIC % Distribution in the Insurance Industry
For the Insurance industry and Financial Services sector, Life Insurance Nepal's ROIC % distribution charts can be found below:
* The bar in red indicates where Life Insurance Nepal's ROIC % falls into.
Life Insurance Nepal ROIC % Calculation
Life Insurance Nepal's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Jul. 2020 is calculated as:
Note:
The EBIT data used here is four times the quarterly (Apr. 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.
Life Insurance Nepal (XNEP:LICN) 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, Life Insurance Nepal's WACC % is 10.26%. Life Insurance Nepal's ROIC % is 0.09% (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.
Life Insurance Nepal ROIC % Related Terms
Thank you for viewing the detailed overview of Life Insurance Nepal's ROIC % provided by GuruFocus.com. Please click on the following links to see related term pages.
Life Insurance Nepal (XNEP:LICN) Business Description
Life Insurance Corp Nepal Ltd is operative in the field of financial services. A joint venture between Life Insurance Corporation of India and Vishal Group of Nepal, it is one of the largest capitalized insurance companies in Nepal. It offers a range of life insurance products such as endowment plans, child plans, money back plans, and services like a revival of a lapsed policy, policy loans, nominations, and bonuses to policyholders. The company's major source of revenue is through insurance premiums, which are received either by direct remittance of cheque or bank draft.
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