Dream Residential REIT (Dream Residential REIT) ROIC % : 5.27% (As of Mar. 2024)

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What is Dream Residential REIT 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 %. Dream Residential REIT's annualized return on invested capital (ROIC %) for the quarter that ended in Mar. 2024 was 5.27%.

As of today (2024-05-13), Dream Residential REIT's WACC % is 7.29%. Dream Residential REIT's ROIC % is 4.09% (calculated using TTM income statement data). Dream Residential REIT earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Dream Residential REIT ROIC % Historical Data

The historical data trend for Dream Residential REIT'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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Dream Residential REIT ROIC % Chart

Dream Residential REIT Annual Data

Trend

Dec22

Dec23

ROIC %

4.67

Dream Residential REIT Quarterly Data
	Feb22	Jun22	Sep22	Dec22	Mar23	Jun23	Dec23	Mar24
ROIC %	Get a 7-Day Free Trial			-	5.28	5.62	-	5.27

Competitive Comparison of Dream Residential REIT's ROIC %

For the REIT - Residential subindustry, Dream Residential REIT'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.

Dream Residential REIT's ROIC % Distribution in the REITs Industry

For the REITs industry and Real Estate sector, Dream Residential REIT's ROIC % distribution charts can be found below:

* The bar in red indicates where Dream Residential REIT's ROIC % falls into.

Dream Residential REIT ROIC % Calculation

Dream Residential REIT's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Dec. 2023 is calculated as:

	ROIC % (A: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2022 )	+	Invested Capital (A: Dec. 2023 ))	/ count )
=	21.392 * ( 1 - 0% )	/	( (468.248	+	447.219)	/ 2 )
=	21.392	/	457.7335
=	4.67 %

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	))
=	432.504	-	7.078	-	( 11.645	-	max(0, 56.437	-	13.615	+	11.645	))
=	468.248

	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	))
=	411.926	-	7.316	-	( 10.943	-	max(0, 55.723	-	13.114	+	10.943	))
=	447.219

Dream Residential REIT's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Mar. 2024 is calculated as:

	ROIC % (Q: Mar. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Dec. 2023 )	+	Invested Capital (Q: Mar. 2024 ))	/ count )
=	23.008 * ( 1 - 0% )	/	( (447.219	+	426.135)	/ 2 )
=	23.008	/	436.677
=	5.27 %

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	))
=	411.926	-	7.316	-	( 10.943	-	max(0, 55.723	-	13.114	+	10.943	))
=	447.219

	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	))
=	409.358	-	4.224	-	( 9.124	-	max(0, 31.705	-	10.704	+	9.124	))
=	426.135

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

Dream Residential REIT (OTCPK:DRREF) 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, Dream Residential REIT's WACC % is 7.29%. Dream Residential REIT's ROIC % is 4.09% (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.

Dream Residential REIT ROIC % Related Terms

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Dream Residential REIT (Dream Residential REIT) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Real Estate » REITs » Dream Residential REIT (OTCPK:DRREF) » Definitions » ROIC %

Comparable Companies

Traded in Other Exchanges

DRR.U:Canada

Address

30 Adelaide Street East, Suite 301, Toronto, ON, CAN, M5C 3H1

Website

https://www.dream.ca

Dream Residential REIT is a Canada-based open-ended, real estate investment trust. It plans to acquire all of the issued and outstanding equity interests in special purpose entities, which collectively own more than 15 multi-residential rental properties. All of its properties are located in the United States.