ESCON Japan REIT Investment (TSE:2971) ROIC % : 3.35% (As of Jul. 2023)

ESCON Japan REIT Investment ROIC % Chart

ESCON Japan REIT Investment Semi-Annual Data
	Oct17	Apr18	Jan19	Jul19	Jan20	Jul20	Jan21	Jul21	Jan22	Jul22	Jan23	Jul23	Jan24
ROIC %	Get a 7-Day Free Trial								4.21	3.44	3.51	3.35	3.40

Competitive Comparison of ESCON Japan REIT Investment's ROIC %

For the REIT - Retail subindustry, ESCON Japan REIT Investment'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.

ESCON Japan REIT Investment's ROIC % Distribution in the REITs Industry

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

* The bar in red indicates where ESCON Japan REIT Investment's ROIC % falls into.

ESCON Japan REIT Investment ROIC % Calculation

ESCON Japan REIT Investment's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Jul. 2022 is calculated as:

where

ESCON Japan REIT Investment's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Jul. 2023 is calculated as:

where

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

ESCON Japan REIT Investment  (TSE:2971) 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, ESCON Japan REIT Investment's WACC % is 1.46%. ESCON Japan REIT Investment's ROIC % is 3.30% (calculated using TTM income statement data). ESCON Japan REIT Investment generates higher returns on investment than it costs the company to raise the capital needed for that investment. It 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. ESCON Japan REIT Investment earns returns that do not match up to its cost of capital. It will destroy value as it grows.

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.

ESCON Japan REIT Investment ROIC % Related Terms

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ESCON Japan REIT Investment (TSE:2971) Business Description