EZZ Life Science Holdings (ASX:EZZ) ROC % : 91.55% (As of Dec. 2023)

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What is EZZ Life Science Holdings 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 %. EZZ Life Science Holdings's annualized return on capital (ROC %) for the quarter that ended in Dec. 2023 was 91.55%.

As of today (2024-06-08), EZZ Life Science Holdings's WACC % is 7.08%. EZZ Life Science Holdings's ROC % is 117.88% (calculated using TTM income statement data). EZZ Life Science 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.

EZZ Life Science Holdings ROC % Historical Data

The historical data trend for EZZ Life Science Holdings'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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EZZ Life Science Holdings ROC % Chart

EZZ Life Science Holdings Annual Data

Trend

Jun20

Jun21

Jun22

Jun23

ROC %

156.83

83.13

230.11

EZZ Life Science Holdings Semi-Annual Data
	Jun21	Dec21	Jun22	Dec22	Jun23	Dec23
ROC %	Get a 7-Day Free Trial			1.36	182.50	107.60	170.84	91.55

EZZ Life Science Holdings ROC % Calculation

EZZ Life Science Holdings's annualized Return on Capital (ROC %) for the fiscal year that ended in Jun. 2023 is calculated as:

	ROC % (A: Jun. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Jun. 2022 )	+	Invested Capital (A: Jun. 2023 ))	/ count )
=	4.615 * ( 1 - 25.93% )	/	( (1.367	+	1.604)	/ 2 )
=	3.4183305	/	1.4855
=	230.11 %

where

	Invested Capital		(A: Jun. 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	))
=	14.265	-	2.433	-	( 10.465	-	max(0, 2.817	-	13.973	+	10.465	))
=	1.367

	Invested Capital		(A: 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	))
=	17.641	-	2.206	-	( 13.831	-	max(0, 2.935	-	17.006	+	13.831	))
=	1.604

EZZ Life Science Holdings'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 )
=	2.986 * ( 1 - 25.16% )	/	( (1.604	+	3.278)	/ 2 )
=	2.2347224	/	2.441
=	91.55 %

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	))
=	17.641	-	2.206	-	( 13.831	-	max(0, 2.935	-	17.006	+	13.831	))
=	1.604

	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	))
=	20.297	-	4.401	-	( 12.618	-	max(0, 4.999	-	19.591	+	12.618	))
=	3.278

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

EZZ Life Science Holdings (ASX:EZZ) 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, EZZ Life Science Holdings's WACC % is 7.08%. EZZ Life Science Holdings's ROC % is 117.88% (calculated using TTM income statement data). EZZ Life Science 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.

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.

EZZ Life Science Holdings ROC % Related Terms

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EZZ Life Science Holdings (ASX:EZZ) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Healthcare » Biotechnology » EZZ Life Science Holdings Ltd (ASX:EZZ) » Definitions » ROC %

Comparable Companies

Traded in Other Exchanges

N/A

Address

104 Derby Street, Silverwater, NSW, AUS, 2128

Website

https://www.ezzlife.com.au

EZZ Life Science Holdings Ltd is a genomic life science company with a mission to improve quality of life and human health. EZZ has a focus on genomic research and development to address four key human health challenges: genetic longevity, human papillomavirus (HPV), helicobacter pylori, and weight management. The company is engaged in formulation, production, marketing and sale of the EZZ branded health and wellbeing products to retailers and consumers domestically and internationally, and wholesale distribution of the EAORON branded skin care products to retailers in Australia and New Zealand.

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