ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. New China Life Insurance Co's annualized return on invested capital (ROIC %) for the quarter that ended in Mar. 2024 was 6.97%.
As of today (2024-05-12), New China Life Insurance Co's WACC % is 72.70%. New China Life Insurance Co's ROIC % is 12.39% (calculated using TTM income statement data).
New China Life Insurance Co earns returns that do not match up to its cost of capital. It will destroy value as it grows.
New China Life Insurance Co ROIC % Historical Data
* 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.
Competitive Comparison of New China Life Insurance Co's ROIC %
For the Insurance - Life subindustry, New China Life Insurance Co'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.
New China Life Insurance Co's ROIC % Distribution in the Insurance Industry
For the Insurance industry and Financial Services sector, New China Life Insurance Co's ROIC % distribution charts can be found below:
* The bar in red indicates where New China Life Insurance Co's ROIC % falls into.
New China Life Insurance Co ROIC % Calculation
New China Life Insurance Co's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Dec. 2023 is calculated as:
Note:
The EBIT data used here is four times the quarterly (Mar. 2024) data.
* 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.
New China Life Insurance Co (SHSE:601336) 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, New China Life Insurance Co's WACC % is 72.70%. New China Life Insurance Co's ROIC % is 12.39% (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.
New China Life Insurance Co ROIC % Related Terms
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New China Life Insurance Co (SHSE:601336) Business Description
Headquartered in Beijing, New China Life Insurance, or NCI, was founded by SOEs and private firms in 1996. The company is the fourth-largest life insurer in China in terms of total assets. Huijin Investment, the government's investment company owns 31% shares of New China Life. The company was listed on the Hong Kong and Shanghai Stock Exchanges in 2011. New China Life offers comprehensive life insurance products and services to individual customers and institutional customers through nationwide distributional networks and diversified marketing channels, manages and deploys insurance funds through its subsidiaries, including Asset Management Company and Asset Management Company (Hong Kong).
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