Chemring Group (Chemring Group) ROIC % : 7.45% (As of Oct. 2023)

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What is Chemring 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 %. Chemring Group's annualized return on invested capital (ROIC %) for the quarter that ended in Oct. 2023 was 7.45%.

As of today (2024-05-03), Chemring Group's WACC % is 10.47%. Chemring Group's ROIC % is 7.44% (calculated using TTM income statement data). Chemring Group earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Chemring Group ROIC % Historical Data

The historical data trend for Chemring 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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Chemring Group ROIC % Chart

Chemring Group Annual Data

Trend

Oct14

Oct15

Oct16

Oct17

Oct18

Oct19

Oct20

Oct21

Oct22

Oct23

ROIC %

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5.51

8.04

9.43

8.28

7.53

Chemring Group Semi-Annual Data
	Apr14	Oct14	Apr15	Oct15	Apr16	Oct16	Apr17	Oct17	Apr18	Oct18	Apr19	Oct19	Apr20	Oct20	Apr21	Oct21	Apr22	Oct22	Apr23	Oct23
ROIC %	Get a 7-Day Free Trial															9.29	11.24	7.08	7.90	7.45

Competitive Comparison of Chemring Group's ROIC %

For the Aerospace & Defense subindustry, Chemring 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.

Chemring Group's ROIC % Distribution in the Aerospace & Defense Industry

For the Aerospace & Defense industry and Industrials sector, Chemring Group's ROIC % distribution charts can be found below:

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

Chemring Group ROIC % Calculation

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

	ROIC % (A: Oct. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Oct. 2022 )	+	Invested Capital (A: Oct. 2023 ))	/ count )
=	55.298 * ( 1 - 14.51% )	/	( (614.852	+	641.048)	/ 2 )
=	47.2742602	/	627.95
=	7.53 %

where

	Invested Capital		(A: Oct. 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	))
=	703.061	-	65.76	-	( 22.449	-	max(0, 128.912	-	205.442	+	22.449	))
=	614.852

	Invested Capital		(A: Oct. 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	))
=	726.431	-	77.588	-	( 7.795	-	max(0, 173.082	-	223.752	+	7.795	))
=	641.048

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

	ROIC % (Q: Oct. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Apr. 2023 )	+	Invested Capital (Q: Oct. 2023 ))	/ count )
=	54.568 * ( 1 - 14.03% )	/	( (617.932	+	641.048)	/ 2 )
=	46.9121096	/	629.49
=	7.45 %

where

	Invested Capital		(Q: Apr. 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	))
=	782.316	-	155.791	-	( 8.593	-	max(0, 164.259	-	245.081	+	8.593	))
=	617.932

	Invested Capital		(Q: Oct. 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	))
=	726.431	-	77.588	-	( 7.795	-	max(0, 173.082	-	223.752	+	7.795	))
=	641.048

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

Chemring Group (OTCPK:CMGMF) 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, Chemring Group's WACC % is 10.47%. Chemring Group's ROIC % is 7.44% (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.

Chemring Group ROIC % Related Terms

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Chemring Group (Chemring Group) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Aerospace & Defense » Chemring Group PLC (OTCPK:CMGMF) » Definitions » ROIC %

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CMGMY:USA CHGl:UK CHG:UK CMN1:Germany

Address

Old Salisbury Lane, Roke Manor, Romsey, Hampshire, GBR, SO51 0ZN

Website

http://www.chemring.co.uk

Chemring Group PLC is a defense technology company. The company's operating segment includes Sensors and Information; it is engaged in the development and manufacturing of electronic countermeasures, chemical and biological threat detection equipment, and explosive hazard detection (EHD) equipment. and Countermeasures and Energetics segment is engaged in the development and manufacturing of expendable countermeasures for air and sea platforms, cartridge/propellant actuated devices, pyrotechnic devices for satellite launch and deployment, missile components, propellants, separation sub-systems, actuators, and energetic materials. It generates maximum revenue from the Countermeasures and Energetics segment. Geographically, the majority of the revenue for the company is generated from UK.