Euro Tech Holdings Co (Euro Tech Holdings Co) ROIC % : -13.29% (As of Jun. 2023)

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What is Euro Tech Holdings Co ROIC %?

ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Euro Tech Holdings Co's annualized return on invested capital (ROIC %) for the quarter that ended in Jun. 2023 was -13.29%.

As of today (2024-05-06), Euro Tech Holdings Co's WACC % is 10.15%. Euro Tech Holdings Co's ROIC % is -0.28% (calculated using TTM income statement data). Euro Tech Holdings Co earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Euro Tech Holdings Co ROIC % Historical Data

The historical data trend for Euro Tech Holdings Co's ROIC % 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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Euro Tech Holdings Co ROIC % Chart

Euro Tech Holdings Co Annual Data

Trend

Dec13

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

ROIC %

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-1.24

-4.49

-10.19

7.00

1.69

Euro Tech Holdings Co Semi-Annual Data
	Dec13	Jun14	Dec14	Jun15	Dec15	Jun16	Dec16	Jun17	Dec17	Jun18	Dec18	Jun19	Dec19	Jun20	Dec20	Jun21	Dec21	Jun22	Dec22	Jun23
ROIC %	Get a 7-Day Free Trial															8.31	5.91	-8.39	11.94	-13.29

Competitive Comparison of Euro Tech Holdings Co's ROIC %

For the Pollution & Treatment Controls subindustry, Euro Tech Holdings Co'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.

Euro Tech Holdings Co's ROIC % Distribution in the Industrial Products Industry

For the Industrial Products industry and Industrials sector, Euro Tech Holdings Co's ROIC % distribution charts can be found below:

* The bar in red indicates where Euro Tech Holdings Co's ROIC % falls into.

Euro Tech Holdings Co ROIC % Calculation

Euro Tech Holdings Co's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Dec. 2022 is calculated as:

	ROIC % (A: Dec. 2022 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2021 )	+	Invested Capital (A: Dec. 2022 ))	/ count )
=	0.197 * ( 1 - 4.26% )	/	( (11.382	+	10.881)	/ 2 )
=	0.1886078	/	11.1315
=	1.69 %

where

	Invested Capital		(A: Dec. 2021 )
=	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	))
=	21.25	-	4.769	-	( 5.269	-	max(0, 6.405	-	11.504	+	5.269	))
=	11.382

	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	))
=	19.363	-	3.502	-	( 5.628	-	max(0, 4.47	-	9.45	+	5.628	))
=	10.881

Euro Tech Holdings Co's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Jun. 2023 is calculated as:

	ROIC % (Q: Jun. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Dec. 2022 )	+	Invested Capital (Q: Jun. 2023 ))	/ count )
=	-1.43 * ( 1 - -0.8% )	/	( (10.881	+	10.805)	/ 2 )
=	-1.44144	/	10.843
=	-13.29 %

where

	Invested Capital		(Q: 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	))
=	19.363	-	3.502	-	( 5.628	-	max(0, 4.47	-	9.45	+	5.628	))
=	10.881

	Invested Capital		(Q: 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	))
=	17.976	-	2.813	-	( 4.358	-	max(0, 3.53	-	8.179	+	4.358	))
=	10.805

Note: The Operating Income data used here is two times the semi-annual (Jun. 2023) data.

Euro Tech Holdings Co (NAS:CLWT) 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, Euro Tech Holdings Co's WACC % is 10.15%. Euro Tech Holdings Co's ROIC % is -0.28% (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.

Euro Tech Holdings Co ROIC % Related Terms

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Euro Tech Holdings Co (Euro Tech Holdings Co) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Industrial Products » Euro Tech Holdings Co Ltd (NAS:CLWT) » Definitions » ROIC %

Comparable Companies

Traded in Other Exchanges

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Address

65 Wong Chuk Hong Road, Unit D, 18th Floor, Room C & D, Gee Chang Hong Centre, Hong Kong, HKG

Website

https://www.euro-tech.com

Euro Tech Holdings Co Ltd is a distributor and manufacturer of technology instruments as well as an environmental engineering services provider. It is engaged in the marketing and trading of water and wastewater related process control, analytical and testing instruments, disinfection equipment, supplies, and related automation systems. There are two operating segments of the company. The Trading and manufacturing segment, which is the key revenue driver, includes distribution of water treatment equipment, laboratory instruments, analyzers, test kits, and related supplies and power generation equipment. The Engineering segment includes water and waste-water treatment engineering and air pollution control business. The majority of the revenue is generated from Hong Kong.