Adore Beauty Group (ASX:ABY) ROIC % : 11.54% (As of Dec. 2023)

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What is Adore Beauty Group 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 %. Adore Beauty Group's annualized return on invested capital (ROIC %) for the quarter that ended in Dec. 2023 was 11.54%.

As of today (2024-05-22), Adore Beauty Group's WACC % is 17.39%. Adore Beauty Group's ROIC % is 2.13% (calculated using TTM income statement data). Adore Beauty Group earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Adore Beauty Group ROIC % Historical Data

The historical data trend for Adore Beauty Group'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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Adore Beauty Group ROIC % Chart

Adore Beauty Group Annual Data

Trend

Jun20

Jun21

Jun22

Jun23

ROIC %

21.63

25.44

-4.59

Adore Beauty Group Semi-Annual Data
	Dec20	Jun21	Dec21	Jun22	Dec22	Jun23	Dec23
ROIC %	Get a 7-Day Free Trial			32.34	11.74	-1.47	-8.19	11.54

Competitive Comparison of Adore Beauty Group's ROIC %

For the Internet Retail subindustry, Adore Beauty Group'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.

Adore Beauty Group's ROIC % Distribution in the Retail - Cyclical Industry

For the Retail - Cyclical industry and Consumer Cyclical sector, Adore Beauty Group's ROIC % distribution charts can be found below:

* The bar in red indicates where Adore Beauty Group's ROIC % falls into.

Adore Beauty Group ROIC % Calculation

Adore Beauty Group's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Jun. 2023 is calculated as:

	ROIC % (A: Jun. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Jun. 2022 )	+	Invested Capital (A: Jun. 2023 ))	/ count )
=	-1.486 * ( 1 - 61.47% )	/	( (10.98	+	13.993)	/ 2 )
=	-0.5725558	/	12.4865
=	-4.59 %

where

	Invested Capital		(A: 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	))
=	59.228	-	18.482	-	( 29.766	-	max(0, 21.125	-	51.601	+	29.766	))
=	10.98

	Invested Capital		(A: Jun. 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	))
=	62.411	-	20.657	-	( 27.761	-	max(0, 25.827	-	55.348	+	27.761	))
=	13.993

Adore Beauty Group's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Dec. 2023 is calculated as:

	ROIC % (Q: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jun. 2023 )	+	Invested Capital (Q: Dec. 2023 ))	/ count )
=	2.466 * ( 1 - 33.95% )	/	( (13.993	+	14.228)	/ 2 )
=	1.628793	/	14.1105
=	11.54 %

where

	Invested Capital		(Q: Jun. 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	))
=	62.411	-	20.657	-	( 27.761	-	max(0, 25.827	-	55.348	+	27.761	))
=	13.993

	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	))
=	71.845	-	26.287	-	( 32.254	-	max(0, 32.022	-	63.352	+	32.254	))
=	14.228

Note: The Operating Income data used here is two times the semi-annual (Dec. 2023) data.

Adore Beauty Group (ASX:ABY) 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, Adore Beauty Group's WACC % is 17.39%. Adore Beauty Group's ROIC % is 2.13% (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.

Adore Beauty Group ROIC % Related Terms

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Adore Beauty Group (ASX:ABY) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Cyclical » Retail - Cyclical » Adore Beauty Group Ltd (ASX:ABY) » Definitions » ROIC %

Comparable Companies

Traded in Other Exchanges

N/A

Address

421 High Street, Level 1, Northcote, VIC, AUS, 3070

Website

https://www.adorebeautygroup.com.au

Adore Beauty Group Ltd is engaged in the online sale of cosmetics. It offers various products including skin care, hair care, body care, cosmetics, fragrances, oral care, and dietary supplements among others. The firm generates revenue through the sale of beauty and personal care products online.

Adore Beauty Group (ASX:ABY) Headlines

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