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ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. Targa Resources Partners LP's annualized return on capital (ROC %) for the quarter that ended in Sep. 2020 was 9.83%.
As of today (2024-05-06), Targa Resources Partners LP's WACC % is 0.00%. Targa Resources Partners LP's ROC % is 0.00% (calculated using TTM income statement data). Targa Resources Partners LP earns returns that do not match up to its cost of capital. It will destroy value as it grows.
The historical data trend for Targa Resources Partners LP'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.
Targa Resources Partners LP Annual Data | |||||||||||||||||||||
Trend | Dec10 | Dec11 | Dec12 | Dec13 | Dec14 | Dec15 | Dec16 | Dec17 | Dec18 | Dec19 | |||||||||||
ROC % | Get a 7-Day Free Trial | 5.37 | 2.27 | 2.15 | 3.08 | 2.88 |
Targa Resources Partners LP Quarterly Data | ||||||||||||||||||||
Dec15 | Mar16 | Jun16 | Sep16 | Dec16 | Mar17 | Jun17 | Sep17 | Dec17 | Mar18 | Jun18 | Sep18 | Dec18 | Mar19 | Jun19 | Sep19 | Dec19 | Mar20 | Jun20 | Sep20 | |
ROC % | Get a 7-Day Free Trial | 1.46 | 6.06 | 9.01 | 5.72 | 9.83 |
Targa Resources Partners LP's annualized Return on Capital (ROC %) for the fiscal year that ended in Dec. 2019 is calculated as:
ROC % (A: Dec. 2019 ) | ||||||
= | NOPAT | / | Average Invested Capital | |||
= | Operating Income * ( 1 - Tax Rate % ) | / | ( (Invested Capital (A: Dec. 2018 ) | + | Invested Capital (A: Dec. 2019 )) | / count ) |
= | 520.4 * ( 1 - 5.45% ) | / | ( (16571.7 | + | 17634.2) | / 2 ) |
= | 492.0382 | / | 17102.95 | |||
= | 2.88 % |
where
Invested Capital | (A: Dec. 2018 ) | |||||||||||
= | 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 | )) |
= | 16890.1 | - | 1824.3 | - | ( 203.3 | - | max(0, 2885.8 | - | 1379.9 | + | 203.3 | )) |
= | 16571.7 |
Invested Capital | (A: Dec. 2019 ) | |||||||||||
= | 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 | )) |
= | 18744.5 | - | 1477.5 | - | ( 291.1 | - | max(0, 1970.2 | - | 1603 | + | 291.1 | )) |
= | 17634.2 |
Targa Resources Partners LP's annualized Return on Capital (ROC %) for the quarter that ended in Sep. 2020 is calculated as:
ROC % (Q: Sep. 2020 ) | ||||||
= | NOPAT | / | Average Invested Capital | |||
= | Operating Income * ( 1 - Tax Rate % ) | / | ( (Invested Capital (Q: Jun. 2020 ) | + | Invested Capital (Q: Sep. 2020 )) | / count ) |
= | 1477.2 * ( 1 - 0% ) | / | ( (15069.8 | + | 14981.8) | / 2 ) |
= | 1477.2 | / | 15025.8 | |||
= | 9.83 % |
where
Invested Capital | (Q: Jun. 2020 ) | |||||||||||
= | 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 | )) |
= | 15916.3 | - | 1108.3 | - | ( 173.6 | - | max(0, 1450.7 | - | 1188.9 | + | 173.6 | )) |
= | 15069.8 |
Invested Capital | (Q: Sep. 2020 ) | |||||||||||
= | 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 | )) |
= | 15994.6 | - | 1130.3 | - | ( 248 | - | max(0, 1516.9 | - | 1399.4 | + | 248 | )) |
= | 14981.8 |
Note: The Operating Income data used here is four times the quarterly (Sep. 2020) 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.
Targa Resources Partners LP (NYSE:NGLS) 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, Targa Resources Partners LP's WACC % is 0.00%. Targa Resources Partners LP's ROC % is 0.00% (calculated using TTM income statement data). Targa Resources Partners LP 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.
Thank you for viewing the detailed overview of Targa Resources Partners LP's ROC % provided by GuruFocus.com. Please click on the following links to see related term pages.
Davis Waters S Iv | director | 10200 ALLIANCE ROAD, SUITE 200, CINCINNATI OH 45242 |
Chris Tong | director | 600 E LAS COLINAS # 1100, IRVING TX 75019 |
Redd Ershel C Jr | director | C/O EL PASO ELECTRIC COMPANY, 100 N. STANTON, EL PASO TX 79901 |
Charles R Crisp | director | 1301 MCKINNEY STE 700, HOUSTON TX 77010 |
Laura C. Fulton | director | THREE RIVERWAY, SUITE 1350, HOUSTON TX 77056 |
Robert B Evans | director | 100 COLLEGE STREET, MINDEN LA 71055 |
Michael A Heim | other: Vice Chairman of the Board | TARGA RESOURCES PARTNERS LP, 1000 LOUISIANA STREET, SUITE 4300, HOUSTON TX 77002 |
Jeffrey J Mcparland | officer: See Remarks | TARGA RESOURCES PARTNERS LP, 1000 LOUISIANA STREET, SUITE 4300, HOUSTON TX 77002 |
Paul W Chung | officer: EVP, Gen. Counsel & Secretary | TARGA RESOURCES PARTNERS LP, 1000 LOUISIANA STREET, SUITE 4300, HOUSTON TX 77002 |
Barry R Pearl | director | P.O. BOX 2521, HOUSTON TX 77252-2521 |
James W Whalen | director, officer: Exec. Chairman of the Board | BETH SIBLEY, 1301 MCKINNEY STE 700, HOOOUSTON TX 77010 |
Joe Bob Perkins | director, officer: CEO | TARGA RESOURCES PARTNERS, LP, 1000 LOUISIANA ST., SUITE 4300, HOUSTON TX 77002 |
Ruth Dreessen | director | 6850 VERSAR CENTER, SPRINGFIELD VA 22151 |
John Robert Sparger | officer: Senior VP and CAO | TARGA RESOURCES PARTNERS LP, 1000 LOUISIANA STREET, SUITE 4300, HOUSTON TX 77002 |
Matthew J Meloy | officer: Executive VP and CFO | 1000 LOUISIANA, SUITE 4300, HOUSTON TX 77002 |
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