Chongqing Iron & Steel Co (SHSE:601005) ROC % : -3.00% (As of Mar. 2024)

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What is Chongqing Iron & Steel Co 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 %. Chongqing Iron & Steel Co's annualized return on capital (ROC %) for the quarter that ended in Mar. 2024 was -3.00%.

As of today (2024-06-09), Chongqing Iron & Steel Co's WACC % is 7.45%. Chongqing Iron & Steel Co's ROC % is -3.57% (calculated using TTM income statement data). Chongqing Iron & Steel Co earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Chongqing Iron & Steel Co ROC % Historical Data

The historical data trend for Chongqing Iron & Steel Co'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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Chongqing Iron & Steel Co ROC % Chart

Chongqing Iron & Steel Co Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

ROC %

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4.89

4.22

9.07

-1.38

-2.89

Chongqing Iron & Steel Co 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															-0.64	-3.03	-0.99	-7.30	-3.00

Chongqing Iron & Steel Co ROC % Calculation

Chongqing Iron & Steel Co'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 )
=	-1238.629 * ( 1 - 14.32% )	/	( (37298.997	+	36142.658)	/ 2 )
=	-1061.2573272	/	36720.8275
=	-2.89 %

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	))
=	39364.8	-	6614.111	-	( 3995.676	-	max(0, 13062.53	-	8514.222	+	3995.676	))
=	37298.997

	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	))
=	37357.035	-	9025.974	-	( 1935.398	-	max(0, 13863.584	-	6051.987	+	1935.398	))
=	36142.658

Chongqing Iron & Steel Co'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 )
=	-1076.552 * ( 1 - -0.03% )	/	( (36142.658	+	35736.061)	/ 2 )
=	-1076.8749656	/	35939.3595
=	-3.00 %

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	))
=	37357.035	-	9025.974	-	( 1935.398	-	max(0, 13863.584	-	6051.987	+	1935.398	))
=	36142.658

	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	))
=	37233.968	-	9800.349	-	( 943.25	-	max(0, 14349.001	-	6046.559	+	943.25	))
=	35736.061

Note: The Operating Income data used here is four times the quarterly (Mar. 2024) data.

Chongqing Iron & Steel Co (SHSE:601005) 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, Chongqing Iron & Steel Co's WACC % is 7.45%. Chongqing Iron & Steel Co's ROC % is -3.57% (calculated using TTM income statement data). Chongqing Iron & Steel Co 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.

Chongqing Iron & Steel Co ROC % Related Terms

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Chongqing Iron & Steel Co (SHSE:601005) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Basic Materials » Steel » Chongqing Iron & Steel Co Ltd (SHSE:601005) » Definitions » ROC %

Traded in Other Exchanges

01053:Hong Kong

Address

No. 2 Jiangnan Avenue, Jiangnan Street, Changshou District, Chongqing, CHN, 401258

Website

https://www.cqgt.cn

Chongqing Iron & Steel Co Ltd is engaged in the production, processing, and sale of steel plates, steel sections, wire rods, bar materials, billets, and thin plates, and in the production and sale of coking and coal chemical products, pig iron & grain slag, steel slag, and steel scrap. Its products are applied in various industries, such as machinery, architecture, engineering, automobile, motorbike, shipbuilding, offshore oil, gas cylinder, boiler as well as oil and gas pipelines. The group's revenue and profit are mainly comprised of steel manufacturing and domestic sales.

Executives

Yao Xiao Hu	Director
Xia Tong	Director
Yu Hong	Director
Lv Feng	senior management
Zhang Shuo Gong	Director
Li Ren Sheng	senior management
Li Yong Xiang	Director
Meng Xiang Yun	Director
Xiao Yu Xin	Supervisors
Wang Bu Lin	senior management
Zhang Li Quan	Director
Ceng Jing	senior management
Tu De Ling	Director
Zhou Ya Ping	Supervisors
Zhao Wei	Supervisors

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