Kawan Food Bhd (XKLS:7216) ROC % : 7.04% (As of Mar. 2024)

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What is Kawan Food Bhd 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 %. Kawan Food Bhd's annualized return on capital (ROC %) for the quarter that ended in Mar. 2024 was 7.04%.

As of today (2024-06-09), Kawan Food Bhd's WACC % is 9.44%. Kawan Food Bhd's ROC % is 6.78% (calculated using TTM income statement data). Kawan Food Bhd earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Kawan Food Bhd ROC % Historical Data

The historical data trend for Kawan Food Bhd'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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Kawan Food Bhd ROC % Chart

Kawan Food Bhd Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

ROC %

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3.13

7.35

8.16

8.55

6.78

Kawan Food Bhd 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															8.42	0.67	7.67	11.62	7.04

Kawan Food Bhd ROC % Calculation

Kawan Food Bhd's annualized Return on Capital (ROC %) for the fiscal year that ended in Dec. 2023 is calculated as:

	ROC % (A: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2022 )	+	Invested Capital (A: Dec. 2023 ))	/ count )
=	24.854 * ( 1 - 12.08% )	/	( (331.82	+	312.314)	/ 2 )
=	21.8516368	/	322.067
=	6.78 %

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	))
=	460.81	-	27.609	-	( 101.381	-	max(0, 51.24	-	223.339	+	101.381	))
=	331.82

	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	))
=	460.757	-	34.901	-	( 113.542	-	max(0, 54.585	-	237.105	+	113.542	))
=	312.314

Kawan Food Bhd'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 )
=	26.06 * ( 1 - 17.8% )	/	( (312.314	+	295.958)	/ 2 )
=	21.42132	/	304.136
=	7.04 %

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	))
=	460.757	-	34.901	-	( 113.542	-	max(0, 54.585	-	237.105	+	113.542	))
=	312.314

	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	))
=	475.254	-	52.069	-	( 127.227	-	max(0, 58.615	-	256.114	+	127.227	))
=	295.958

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

Kawan Food Bhd (XKLS:7216) 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, Kawan Food Bhd's WACC % is 9.44%. Kawan Food Bhd's ROC % is 6.78% (calculated using TTM income statement data). Kawan Food 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 %, 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.

Kawan Food Bhd ROC % Related Terms

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Kawan Food Bhd (XKLS:7216) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Defensive » Consumer Packaged Goods » Kawan Food Bhd (XKLS:7216) » Definitions » ROC %

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Address

Lot 129351, Jalan Sungai Pinang 4/19, Selangor Halal Hub, Fasa 2C, Taman Perindustrian Pulau Indah, Pulau Indah, SGR, MYS, 42920

Website

https://www.kawanfood.com

Kawan Food Bhd is an investment holding company principally engaged in the business of manufacturing and selling frozen food products. The product portfolio includes Bakery, Bun, Chapatti, Dessert, Finger Food, Frozen Vegetable, Paratha and Spring Roll Pastry and others. The company produce and sell food under the brands of Kawan, KG Pastry, Veat, PassionBake and Aman, of which Kawan remains its key brand. The group is also involved in the other businesses of investment property and rental of trucks; food truck operator and others. Its geographical segments include Malaysia, North America, Rest of Asia, Europe, Oceania, and Africa.

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