Arif Habib (KAR:AHCL) ROC % : 5.87% (As of Mar. 2024)

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What is Arif Habib ROC %?

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. Arif Habib's annualized return on capital (ROC %) for the quarter that ended in Mar. 2024 was 5.87%.

As of today (2024-06-02), Arif Habib's WACC % is 10.20%. Arif Habib's ROC % is 9.01% (calculated using TTM income statement data). Arif Habib earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Arif Habib ROC % Historical Data

The historical data trend for Arif Habib's ROC % 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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Arif Habib ROC % Chart

Arif Habib Annual Data

Trend

Jun14

Jun15

Jun16

Jun17

Jun18

Jun19

Jun20

Jun21

Jun22

Jun23

ROC %

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2.99

7.19

8.54

6.89

7.87

Arif Habib Quarterly Data
	Mar19	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Mar24
ROC %	Get a 7-Day Free Trial															2.42	3.08	12.12	18.30	5.87

Arif Habib ROC % Calculation

Arif Habib's annualized Return on Capital (ROC %) for the fiscal year that ended in Jun. 2023 is calculated as:

	ROC % (A: Jun. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Jun. 2022 )	+	Invested Capital (A: Jun. 2023 ))	/ count )
=	5082.5 * ( 1 - 30.63% )	/	( (41168.31	+	48458.912)	/ 2 )
=	3525.73025	/	44813.611
=	7.87 %

where

	Invested Capital		(A: Jun. 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	))
=	54251.381	-	1731.688	-	( 12267.902	-	max(0, 8309.538	-	19660.921	+	12267.902	))
=	41168.31

	Invested Capital		(A: Jun. 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	))
=	57779.968	-	2020.451	-	( 7300.605	-	max(0, 8893.924	-	16930.594	+	7300.605	))
=	48458.912

Arif Habib's annualized Return on Capital (ROC %) for the quarter that ended in Mar. 2024 is calculated as:

	ROC % (Q: Mar. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Sep. 2023 )	+	Invested Capital (Q: Mar. 2024 ))	/ count )
=	3719.208 * ( 1 - 20.13% )	/	( (51429.344	+	49786.263)	/ 2 )
=	2970.5314296	/	50607.8035
=	5.87 %

where

	Invested Capital		(Q: Sep. 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	))
=	63448.319	-	2933.026	-	( 9085.949	-	max(0, 11517.941	-	22186.049	+	9085.949	))
=	51429.344

	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	))
=	67465.96	-	6770.607	-	( 12879.127	-	max(0, 12778.34	-	23687.43	+	12879.127	))
=	49786.263

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

Arif Habib (KAR:AHCL) ROC % Explanation

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. 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 ROC % 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, Arif Habib's WACC % is 10.20%. Arif Habib's ROC % is 9.01% (calculated using TTM income statement data). Arif Habib 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 %, ROC % 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.

Arif Habib ROC % Related Terms

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Arif Habib (KAR:AHCL) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Utilities » Utilities - Independent Power Producers » Arif Habib Corp Ltd (KAR:AHCL) » Definitions » ROC %

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Address

23 M.T. Khan Road, Arif Habib Centre, 2nd Floor, Karachi, SD, PAK, 74000

Website

https://www.arifhabibcorp.com

Arif Habib Corp Ltd generates and sells electricity in Pakistan. It is also engaged in providing equity and debt brokerage, as well as corporate finance services to institutional, corporate, high-net-worth, and retail clients. Its segments are Capital market operations; Brokerage; Energy Development, and Others. The firm generates the majority of revenue from the Energy segment. The Energy segment is engaged in energy development. The brokerage segment is engaged in brokerage, underwriting, corporate consultancy, research, and corporate finance services. Capital market operations segment is engaged in trading of equity securities and maintaining strategic and trading portfolios. Others include assets of RCPL.

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