ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. IMS Group Holdings's annualized return on invested capital (ROIC %) for the quarter that ended in Sep. 2023 was 136.92%.
As of today (2024-05-15), IMS Group Holdings's WACC % is 4.75%. IMS Group Holdings's ROIC % is 39.59% (calculated using TTM income statement data).
IMS Group Holdings generates higher returns on investment than it costs the company to raise the capital needed for that investment. It 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.
IMS Group Holdings ROIC % Historical Data
The historical data trend for IMS Group Holdings'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.
Competitive Comparison of IMS Group Holdings's ROIC %
For the Electrical Equipment & Parts subindustry, IMS Group Holdings'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.
IMS Group Holdings's ROIC % Distribution in the Industrial Products Industry
For the Industrial Products industry and Industrials sector, IMS Group Holdings's ROIC % distribution charts can be found below:
* The bar in red indicates where IMS Group Holdings's ROIC % falls into.
IMS Group Holdings ROIC % Calculation
IMS Group Holdings's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Mar. 2023 is calculated as:
Note:
The Operating Income data used here is four times the quarterly (Sep. 2023) 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.
IMS Group Holdings (HKSE:08136) 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, IMS Group Holdings's WACC % is 4.75%. IMS Group Holdings's ROIC % is 39.59% (calculated using TTM income statement data).
IMS Group Holdings generates higher returns on investment than it costs the company to raise the capital needed for that investment. It 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.
IMS Group Holdings 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 %, 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.
IMS Group Holdings ROIC % Related Terms
Thank you for viewing the detailed overview of IMS Group Holdings's ROIC % provided by GuruFocus.com. Please click on the following links to see related term pages.
IMS Group Holdings (HKSE:08136) Business Description
IMS Group Holdings Ltd is a provider of integrated LED lighting solutions. The company principally engaged in sale of LED lighting fixtures and visual-audio system, provision of integrated LED lighting solution services, project consultancy and LED lighting system maintenance services, sale of 3D printing materials and provision for 3D printing services. The firm receives a majority of its revenue from the sale of LED lighting fixtures followed by integrated LED lighting solution services. It has a business presence in Hong Kong, the PRC, Asia, Europe and others, of which the key revenue is derived from the PRC.
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