Electric Metals (TSXV:EML) ROC % : -11.10% (As of Mar. 2024)

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What is Electric Metals 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 %. Electric Metals's annualized return on capital (ROC %) for the quarter that ended in Mar. 2024 was -11.10%.

As of today (2024-06-07), Electric Metals's WACC % is 7.93%. Electric Metals's ROC % is -19.61% (calculated using TTM income statement data). Electric Metals earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Electric Metals ROC % Historical Data

The historical data trend for Electric Metals'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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Electric Metals ROC % Chart

Electric Metals Annual Data

Trend

Dec21

Dec22

Dec23

ROC %

-39.88

-32.00

-25.63

Electric Metals Quarterly Data
	Mar20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23	Mar24
ROC %	Get a 7-Day Free Trial									-31.98	-27.91	-26.12	-14.12	-11.10

Electric Metals ROC % Calculation

Electric Metals'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 )
=	-3.268 * ( 1 - 0% )	/	( (9.565	+	15.941)	/ 2 )
=	-3.268	/	12.753
=	-25.63 %

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	))
=	9.678	-	2.938	-	( 0.171	-	max(0, 3.129	-	0.304	+	0.171	))
=	9.565

	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	))
=	18.49	-	1.645	-	( 2.495	-	max(0, 1.756	-	2.66	+	2.495	))
=	15.941

Electric Metals'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 )
=	-1.788 * ( 1 - 0% )	/	( (15.941	+	16.277)	/ 2 )
=	-1.788	/	16.109
=	-11.10 %

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	))
=	18.49	-	1.645	-	( 2.495	-	max(0, 1.756	-	2.66	+	2.495	))
=	15.941

	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	))
=	17.798	-	1.364	-	( 1.305	-	max(0, 1.364	-	1.521	+	1.305	))
=	16.277

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

Electric Metals (TSXV:EML) 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, Electric Metals's WACC % is 7.93%. Electric Metals's ROC % is -19.61% (calculated using TTM income statement data). Electric Metals 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.

Electric Metals ROC % Related Terms

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Electric Metals (TSXV:EML) Business Description

Industry

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EMUSF:USA

Address

365 Bay Street, Suite 800, Toronto, ON, CAN, M5H 2V1

Website

https://www.electricmetals.com

Electric Metals (USA) Ltd is a U.S.-based mineral development company with manganese and silver projects geared to supporting the transition to clean energy. The Company's principal asset is the Emily Manganese Project in Minnesota, which has been the subject of considerable technical studies, including a National Instrument 43-101 Technical Report - Resource Estimate, with over US$26 million invested to date. The Company's mission in Minnesota is to become a domestic U.S. producer of high-purity, high-value manganese metal and chemical products for supply to U.S. energy, technology and industrial markets. With manganese plays a critical and prominent role in lithium-ion battery formulations, and with no current domestic supply or active mines for manganese in North America.