Avon Protection (LSE:AVON) ROC % : 2.18% (As of Mar. 2024)

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What is Avon Protection 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 %. Avon Protection's annualized return on capital (ROC %) for the quarter that ended in Mar. 2024 was 2.18%.

As of today (2024-05-24), Avon Protection's WACC % is 4.50%. Avon Protection's ROC % is -3.89% (calculated using TTM income statement data). Avon Protection earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Avon Protection ROC % Historical Data

The historical data trend for Avon Protection'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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Avon Protection ROC % Chart

Avon Protection Annual Data

Trend

Sep14

Sep15

Sep16

Sep17

Sep18

Sep19

Sep20

Sep21

Sep22

Sep23

ROC %

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11.94

7.79

-6.25

3.40

-3.09

Avon Protection Semi-Annual Data
	Sep14	Mar15	Sep15	Mar16	Sep16	Mar17	Sep17	Mar18	Sep18	Mar19	Sep19	Mar20	Sep20	Mar21	Sep21	Mar22	Sep22	Mar23	Sep23	Mar24
ROC %	Get a 7-Day Free Trial															-2.95	9.69	2.38	-8.42	2.18

Avon Protection ROC % Calculation

Avon Protection's annualized Return on Capital (ROC %) for the fiscal year that ended in Sep. 2023 is calculated as:

	ROC % (A: Sep. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Sep. 2022 )	+	Invested Capital (A: Sep. 2023 ))	/ count )
=	-10.181 * ( 1 - 18.81% )	/	( (280.265	+	255.328)	/ 2 )
=	-8.2659539	/	267.7965
=	-3.09 %

where

	Invested Capital		(A: Sep. 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	))
=	307.284	-	18.631	-	( 8.388	-	max(0, 41.589	-	97.218	+	8.388	))
=	280.265

	Invested Capital		(A: Sep. 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	))
=	281.265	-	15.271	-	( 10.666	-	max(0, 32.32	-	101.97	+	10.666	))
=	255.328

Avon Protection's annualized Return on Capital (ROC %) for the quarter that ended in Mar. 2024 is calculated as:

	ROC % (Q: Mar. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Sep. 2023 )	+	Invested Capital (Q: Mar. 2024 ))	/ count )
=	4.092 * ( 1 - -26.69% )	/	( (255.328	+	219.889)	/ 2 )
=	5.1841548	/	237.6085
=	2.18 %

where

	Invested Capital		(Q: Sep. 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	))
=	281.265	-	15.271	-	( 10.666	-	max(0, 32.32	-	101.97	+	10.666	))
=	255.328

	Invested Capital		(Q: Mar. 2024 )
=	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	))
=	257.979	-	29.276	-	( 8.814	-	max(0, 35.808	-	88.459	+	8.814	))
=	219.889

Note: The Operating Income data used here is two times the semi-annual (Mar. 2024) data.

Avon Protection (LSE:AVON) 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, Avon Protection's WACC % is 4.50%. Avon Protection's ROC % is -3.89% (calculated using TTM income statement data). Avon Protection 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.

Avon Protection ROC % Related Terms

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Avon Protection (LSE:AVON) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Aerospace & Defense » Avon Protection PLC (LSE:AVON) » Definitions » ROC %

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AVNBF:USA AVONl:UK AVON.GB:UK 1OK:Germany

Address

Semington Road, Hampton Park West, Melksham, Wiltshire, GBR, SN12 6NB

Website

https://www.avon-protection-plc.com

Avon Protection PLC is engaged in providing technology that designs and produces life-critical personal protection systems to maximize the performance and capabilities of its customers. The company's portfolio of life-critical protection solutions includes full-face respirators, ballistic helmets, escape hoods, SCBA systems, modular PAPR units, thermal imaging cameras, and underwater equipment for the world's militaries and first responders. The company has two operating and reportable segments, these being Respiratory Protection; which is the key revenue generating segment and the Head Protection. Geographically, the revenue is generated from United States which is the key revenue generating market and Europe.

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