Eurofins Scientific SE (Eurofins Scientific SE) ROC % : 3.87% (As of Dec. 2023)

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What is Eurofins Scientific SE 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 %. Eurofins Scientific SE's annualized return on capital (ROC %) for the quarter that ended in Dec. 2023 was 3.87%.

As of today (2024-04-27), Eurofins Scientific SE's WACC % is 6.32%. Eurofins Scientific SE's ROC % is 4.62% (calculated using TTM income statement data). Eurofins Scientific SE earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Eurofins Scientific SE ROC % Historical Data

The historical data trend for Eurofins Scientific SE'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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Eurofins Scientific SE ROC % Chart

Eurofins Scientific SE Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

ROC %

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3.56

9.88

13.11

7.50

4.77

Eurofins Scientific SE Semi-Annual Data
	Jun14	Dec14	Jun15	Dec15	Jun16	Dec16	Jun17	Dec17	Jun18	Dec18	Jun19	Dec19	Jun20	Dec20	Jun21	Dec21	Jun22	Dec22	Jun23	Dec23
ROC %	Get a 7-Day Free Trial															9.92	9.65	4.36	5.28	3.87

Eurofins Scientific SE ROC % Calculation

Eurofins Scientific SE'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 )
=	596.292 * ( 1 - 27.29% )	/	( (8746.928	+	9419.301)	/ 2 )
=	433.5639132	/	9083.1145
=	4.77 %

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	))
=	10681.674	-	1419.28	-	( 515.466	-	max(0, 1877.331	-	2450.53	+	515.466	))
=	8746.928

	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	))
=	11874.155	-	1424.646	-	( 1331.734	-	max(0, 2313.74	-	3343.948	+	1331.734	))
=	9419.301

Eurofins Scientific SE's annualized Return on Capital (ROC %) for the quarter that ended in Dec. 2023 is calculated as:

	ROC % (Q: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jun. 2023 )	+	Invested Capital (Q: Dec. 2023 ))	/ count )
=	479.172 * ( 1 - 22.87% )	/	( (9673.565	+	9419.301)	/ 2 )
=	369.5853636	/	9546.433
=	3.87 %

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	))
=	11178.657	-	761.43	-	( 743.662	-	max(0, 1952.113	-	2800.542	+	743.662	))
=	9673.565

	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	))
=	11874.155	-	1424.646	-	( 1331.734	-	max(0, 2313.74	-	3343.948	+	1331.734	))
=	9419.301

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

Eurofins Scientific SE (OTCPK:ERFSF) 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, Eurofins Scientific SE's WACC % is 6.32%. Eurofins Scientific SE's ROC % is 4.62% (calculated using TTM income statement data). Eurofins Scientific SE 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.

Eurofins Scientific SE ROC % Related Terms

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Eurofins Scientific SE (Eurofins Scientific SE) Business Description

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GURUFOCUS.COM » STOCK LIST » Healthcare » Medical Diagnostics & Research » Eurofins Scientific SE (OTCPK:ERFSF) » Definitions » ROC %

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ERFp:UK 0MV5:UK ERF:France ESF0:Germany

Address

23 Val Fleuri, Luxembourg, LUX, L-1526

Website

https://www.eurofins.com

Eurofins, headquartered in Luxembourg, is a decentralized network of life sciences companies that provide various analytical tests and laboratory services. These include tests to evaluate the safety, identity, composition, authenticity, purity, origin, and traceability of various biological substances and products. Eurofins operates over 900 laboratories in 61 countries. Its revenue from Europe, North America, and the Rest of the World contribute approximately 50%, 40%, and 10% of total revenue respectively. Its main business activities are food and environmental testing, biopharmaceutical services, diagnostic services and products, and consumer and technology products testing, which contribute approximately 40%, 30%, 20%, and 10% respectively.