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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 %. Research Frontiers's annualized return on capital (ROC %) for the quarter that ended in Mar. 2024 was -149.38%.
As of today (2024-05-26), Research Frontiers's WACC % is 4.03%. Research Frontiers's ROC % is -168.96% (calculated using TTM income statement data). Research Frontiers earns returns that do not match up to its cost of capital. It will destroy value as it grows.
The historical data trend for Research Frontiers'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.
Research Frontiers Annual Data | |||||||||||||||||||||
Trend | Dec14 | Dec15 | Dec16 | Dec17 | Dec18 | Dec19 | Dec20 | Dec21 | Dec22 | Dec23 | |||||||||||
ROC % | Get a 7-Day Free Trial | -271.11 | -183.09 | -132.64 | -215.52 | -173.76 |
Research Frontiers Quarterly Data | ||||||||||||||||||||
Jun19 | Sep19 | Dec19 | Mar20 | Jun20 | Sep20 | Dec20 | Mar21 | Jun21 | Sep21 | Dec21 | Mar22 | Jun22 | Sep22 | Dec22 | Mar23 | Jun23 | Sep23 | Dec23 | Mar24 | |
ROC % | Get a 7-Day Free Trial | -183.06 | -183.09 | -176.03 | -164.29 | -149.38 |
Research Frontiers'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 ) |
= | -2.033 * ( 1 - 0% ) | / | ( (1.03 | + | 1.31) | / 2 ) |
= | -2.033 | / | 1.17 | |||
= | -173.76 % |
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 | )) |
= | 5.366 | - | 0.105 | - | ( 4.231 | - | max(0, 0.302 | - | 4.921 | + | 4.231 | )) |
= | 1.03 |
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 | )) |
= | 3.851 | - | 0.065 | - | ( 2.476 | - | max(0, 0.277 | - | 3.576 | + | 2.476 | )) |
= | 1.31 |
Research Frontiers'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: Dec. 2023 ) | + | Invested Capital (Q: Mar. 2024 )) | / count ) |
= | -1.88 * ( 1 - 0% ) | / | ( (1.31 | + | 1.207) | / 2 ) |
= | -1.88 | / | 1.2585 | |||
= | -149.38 % |
where
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 | )) |
= | 3.851 | - | 0.065 | - | ( 2.476 | - | max(0, 0.277 | - | 3.576 | + | 2.476 | )) |
= | 1.31 |
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 | )) |
= | 3.523 | - | 0.223 | - | ( 2.093 | - | max(0, 0.439 | - | 3.291 | + | 2.093 | )) |
= | 1.207 |
Note: The Operating Income data used here is four times the quarterly (Mar. 2024) 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.
Research Frontiers (NAS:REFR) 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, Research Frontiers's WACC % is 4.03%. Research Frontiers's ROC % is -168.96% (calculated using TTM income statement data). Research Frontiers 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 Research Frontiers's ROC % provided by GuruFocus.com. Please click on the following links to see related term pages.
Darryl Daigle | director | 3213 WYTCHWOOD DRIVE, MORGAN CITY LA 70380 |
Eyal Peso | director | C/O GAUZY LTD., 14 HATHIYA STREET, TEL AVIV-YAFO L3 6816914 |
Kevin Douglas | 10 percent owner, other: 13(d)(3) group | 300A DRAKES LANDING ROAD, SUITE 200, GREENBRAE CA 94904 |
William Graham Settle | director | 6003 COBRIDGE SQUARE, RALEIGH NC 27609 |
Michael R Lapointe | officer: Vice President-Marketing | |
Alexander Kaganowicz | director | 1217 CARLLS STRAIGHT PATH, DIX HILLS NY 11746 |
Joseph M Harary | director, officer: Persident and CEO | |
Grimes George Gregory | director | 24 FIFTH AVENUE, APT. 1530, NEW YORK NY 10011 |
Douglas Family Trust | 10 percent owner, other: 13(d)(3) group | 300A DRAKES LANDING ROAD, SUITE 200, GREENBRAE CA 94904 |
James & Jean Douglas Irrevocable Descendants Trust | 10 percent owner, other: 13(d)(3) group | 300A DRAKES LANDING ROAD, SUITE 200, GREENBRAE CA 94904 |
Voorhees Seth Van | officer: VicePresident-Business Dev/CFO | 12 HARVEY DRIVE, SHORT HILLS NJ 07078 |
Robert L Saxe | director, officer: Chairman/CTO | |
Steven Michael Slovak | officer: Vice President-Technology | 240 CROSSWAYS PARK DRIVE, WOODBURY NY 11797 |
Jack Derby | director | 399 BOYLSTON STREET, BOSTON MA 02117 |
Victor F Keen | director | C/O RESEARCH FRONTIERS INC., 240 CROSSWAYS PARK DRIVE, WOODBURY NY 11797 |
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