Authentic Equity Acquisition (Authentic Equity Acquisition) ROIC % : -0.32% (As of Sep. 2022)

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What is Authentic Equity Acquisition ROIC %?

ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Authentic Equity Acquisition's annualized return on invested capital (ROIC %) for the quarter that ended in Sep. 2022 was -0.32%.

As of today (2024-05-31), Authentic Equity Acquisition's WACC % is 10.75%. Authentic Equity Acquisition's ROIC % is -0.44% (calculated using TTM income statement data). Authentic Equity Acquisition earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Authentic Equity Acquisition ROIC % Historical Data

The historical data trend for Authentic Equity Acquisition's ROIC % 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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Authentic Equity Acquisition ROIC % Chart

Authentic Equity Acquisition Annual Data

Trend

Dec20

Dec21

ROIC %

-1.36

Authentic Equity Acquisition Quarterly Data
	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22
ROIC %	Get a 7-Day Free Trial				-0.62	-0.62	-0.53	-0.28	-0.32

Competitive Comparison of Authentic Equity Acquisition's ROIC %

For the Shell Companies subindustry, Authentic Equity Acquisition's ROIC %, along with its competitors' market caps and ROIC % data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

Authentic Equity Acquisition's ROIC % Distribution in the Diversified Financial Services Industry

For the Diversified Financial Services industry and Financial Services sector, Authentic Equity Acquisition's ROIC % distribution charts can be found below:

* The bar in red indicates where Authentic Equity Acquisition's ROIC % falls into.

Authentic Equity Acquisition ROIC % Calculation

Authentic Equity Acquisition's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Dec. 2021 is calculated as:

	ROIC % (A: Dec. 2021 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2020 )	+	Invested Capital (A: Dec. 2021 ))	/ count )
=	-1.567 * ( 1 - 0% )	/	( (0.508	+	230.022)	/ 2 )
=	-1.567	/	115.265
=	-1.36 %

where

	Invested Capital		(A: Dec. 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	))
=	0.411	-	0.324	-	( 0	-	max(0, 0.421	-	0	+	0	))
=	0.508

	Invested Capital		(A: Dec. 2021 )
=	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	))
=	230.698	-	0.877	-	( 0.442	-	max(0, 0.877	-	0.676	+	0.442	))
=	230.022

Authentic Equity Acquisition's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Sep. 2022 is calculated as:

	ROIC % (Q: Sep. 2022 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jun. 2022 )	+	Invested Capital (Q: Sep. 2022 ))	/ count )
=	-0.748 * ( 1 - 0% )	/	( (230.334	+	231.375)	/ 2 )
=	-0.748	/	230.8545
=	-0.32 %

where

	Invested Capital		(Q: Jun. 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	))
=	230.541	-	0.875	-	( 0.05	-	max(0, 0.875	-	0.207	+	0.05	))
=	230.334

	Invested Capital		(Q: 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	))
=	231.441	-	0.92	-	( 0.008	-	max(0, 0.945	-	0.091	+	0.008	))
=	231.375

Note: The Operating Income data used here is four times the quarterly (Sep. 2022) data.

Authentic Equity Acquisition (NAS:AEACW) ROIC % Explanation

ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. 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 ROIC % 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, Authentic Equity Acquisition's WACC % is 10.75%. Authentic Equity Acquisition's ROIC % is -0.44% (calculated using TTM income statement data).

Be Aware

Like ROE % and ROA %, ROIC % 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.

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