Sumitomo Chemical Co (TSE:4005) ROC % : -37.53% (As of Mar. 2024)

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What is Sumitomo Chemical Co 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 %. Sumitomo Chemical Co's annualized return on capital (ROC %) for the quarter that ended in Mar. 2024 was -37.53%.

As of today (2024-05-26), Sumitomo Chemical Co's WACC % is 4.19%. Sumitomo Chemical Co's ROC % is -12.87% (calculated using TTM income statement data). Sumitomo Chemical Co earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Sumitomo Chemical Co ROC % Historical Data

The historical data trend for Sumitomo Chemical Co'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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Sumitomo Chemical Co ROC % Chart

Sumitomo Chemical Co Annual Data

Trend

Mar15

Mar16

Mar17

Mar18

Mar19

Mar20

Mar21

Mar22

Mar23

Mar24

ROC %

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1.95

2.43

4.01

148.17

-13.49

Sumitomo Chemical Co Quarterly Data
	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23	Mar24
ROC %	Get a 7-Day Free Trial															-9.23	-7.26	-5.58	-1.61	-37.53

Sumitomo Chemical Co ROC % Calculation

Sumitomo Chemical Co's annualized Return on Capital (ROC %) for the fiscal year that ended in Mar. 2024 is calculated as:

	ROC % (A: Mar. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Mar. 2023 )	+	Invested Capital (A: Mar. 2024 ))	/ count )
=	-431428 * ( 1 - -0.57% )	/	( (3280785	+	3150494)	/ 2 )
=	-433887.1396	/	3215639.5
=	-13.49 %

where

	Invested Capital		(A: Mar. 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	))
=	4165503	-	547637	-	( 337081	-	max(0, 1278367	-	1762884	+	337081	))
=	3280785

	Invested Capital		(A: 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	))
=	3934818	-	551929	-	( 248787	-	max(0, 1443487	-	1675882	+	248787	))
=	3150494

Sumitomo Chemical Co'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: Dec. 2023 )	+	Invested Capital (Q: Mar. 2024 ))	/ count )
=	-1244284 * ( 1 - 0.77% )	/	( (3429992	+	3150494)	/ 2 )
=	-1234703.0132	/	3290243
=	-37.53 %

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	))
=	4219651	-	504265	-	( 311978	-	max(0, 1424033	-	1709427	+	311978	))
=	3429992

	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	))
=	3934818	-	551929	-	( 248787	-	max(0, 1443487	-	1675882	+	248787	))
=	3150494

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

Sumitomo Chemical Co (TSE:4005) 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, Sumitomo Chemical Co's WACC % is 4.19%. Sumitomo Chemical Co's ROC % is -12.87% (calculated using TTM income statement data). Sumitomo Chemical Co 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.

Sumitomo Chemical Co ROC % Related Terms

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Sumitomo Chemical Co (TSE:4005) Business Description

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SOMMY:USA SOMMF:USA SMM:Germany

Address

27-1, Shinkawa 2-chome, Chuo-ku, Tokyo, JPN, 104-8260

Website

http://www.sumitomo-chem.co.jp

Sumitomo Chemical Co Ltd manufactures and sells chemicals and chemical-based products. The firm is organized into six segments by product type. The petrochemicals and plastics segment, which generates more revenue than any other segment, sells multiple products including propylene and polypropylene used in automobile seat cushions and interior panels. The pharmaceutical segment sells medicine to treat diabetes, neurology, cancer, and infectious diseases. The IT-related chemicals segment sells compound semiconductors and polarizing films used in LCD displays for TVs and smartphones. The other three segments are health and crop sciences; energy and functional materials; and "others." The majority of revenue comes from Japan and China.

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