Meihua International Medical Technologies Co (Meihua International Medical Technologies Co) ROIC % : 6.42% (As of Dec. 2023)

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What is Meihua International Medical Technologies 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 %. Meihua International Medical Technologies Co's annualized return on invested capital (ROIC %) for the quarter that ended in Dec. 2023 was 6.42%.

As of today (2024-05-10), Meihua International Medical Technologies Co's WACC % is 8.31%. Meihua International Medical Technologies Co's ROIC % is 8.81% (calculated using TTM income statement data). Meihua International Medical Technologies Co 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.

Meihua International Medical Technologies Co ROIC % Historical Data

The historical data trend for Meihua International Medical Technologies 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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Meihua International Medical Technologies Co ROIC % Chart

Meihua International Medical Technologies Co Annual Data

Trend

Dec19

Dec20

Dec21

Dec22

Dec23

ROIC %

33.63

29.66

22.61

7.89

8.83

Meihua International Medical Technologies Co Semi-Annual Data
	Dec19	Jun20	Dec20	Jun21	Dec21	Jun22	Dec22	Jun23	Dec23
ROIC %	Get a 7-Day Free Trial				24.03	14.89	-1.51	11.37	6.42

Competitive Comparison of Meihua International Medical Technologies Co's ROIC %

For the Medical Instruments & Supplies subindustry, Meihua International Medical Technologies 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.

Meihua International Medical Technologies Co's ROIC % Distribution in the Medical Devices & Instruments Industry

For the Medical Devices & Instruments industry and Healthcare sector, Meihua International Medical Technologies Co's ROIC % distribution charts can be found below:

* The bar in red indicates where Meihua International Medical Technologies Co's ROIC % falls into.

Meihua International Medical Technologies Co ROIC % Calculation

Meihua International Medical Technologies Co's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Dec. 2023 is calculated as:

	ROIC % (A: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2022 )	+	Invested Capital (A: Dec. 2023 ))	/ count )
=	14.675 * ( 1 - 22.98% )	/	( (118.757	+	137.242)	/ 2 )
=	11.302685	/	127.9995
=	8.83 %

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	))
=	163.578	-	18.084	-	( 26.737	-	max(0, 24.174	-	135.319	+	26.737	))
=	118.757

	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	))
=	171.915	-	17.746	-	( 16.927	-	max(0, 25.073	-	132.237	+	16.927	))
=	137.242

Meihua International Medical Technologies Co's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Dec. 2023 is calculated as:

	ROIC % (Q: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jun. 2023 )	+	Invested Capital (Q: Dec. 2023 ))	/ count )
=	11.156 * ( 1 - 23.42% )	/	( (128.7	+	137.242)	/ 2 )
=	8.5432648	/	132.971
=	6.42 %

where

	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	))
=	162.612	-	16.051	-	( 17.861	-	max(0, 23.222	-	132.265	+	17.861	))
=	128.7

	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	))
=	171.915	-	17.746	-	( 16.927	-	max(0, 25.073	-	132.237	+	16.927	))
=	137.242

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

Meihua International Medical Technologies Co (NAS:MHUA) 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, Meihua International Medical Technologies Co's WACC % is 8.31%. Meihua International Medical Technologies Co's ROIC % is 8.81% (calculated using TTM income statement data). Meihua International Medical Technologies Co 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. Meihua International Medical Technologies 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 %, 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.

Meihua International Medical Technologies Co ROIC % Related Terms

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Meihua International Medical Technologies Co (Meihua International Medical Technologies Co) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Healthcare » Medical Devices & Instruments » Meihua International Medical Technologies Co Ltd (NAS:MHUA) » Definitions » ROIC %

Comparable Companies

Traded in Other Exchanges

N/A

Address

88 Tongda Road, Touqiao Town, Guangling District, Yangzhou, CHN, 225000

Website

http://www.meihuamed.com

Meihua International Medical Technologies Co Ltd is engaged in providing disposable medical devices. It serves hospitals, pharmacies, medical institutions, and medical equipment companies. Its product offerings include a Disposable Medical mask, Disposable ID Bracelet, Disposable Artificial Anal bag, Disposable Catheter, and Electonic pump among others.