ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Fukuda Denshi Co's annualized return on invested capital (ROIC %) for the quarter that ended in Dec. 2023 was 11.80%.
As of today (2024-05-12), Fukuda Denshi Co's WACC % is 2.81%. Fukuda Denshi Co's ROIC % is 15.39% (calculated using TTM income statement data).
Fukuda Denshi Co 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.
Fukuda Denshi Co ROIC % Historical Data
The historical data trend for Fukuda Denshi Co'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.
Competitive Comparison of Fukuda Denshi Co's ROIC %
For the Medical Devices subindustry, Fukuda Denshi 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.
Fukuda Denshi Co's ROIC % Distribution in the Medical Devices & Instruments Industry
For the Medical Devices & Instruments industry and Healthcare sector, Fukuda Denshi Co's ROIC % distribution charts can be found below:
* The bar in red indicates where Fukuda Denshi Co's ROIC % falls into.
Fukuda Denshi Co ROIC % Calculation
Fukuda Denshi Co's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Mar. 2023 is calculated as:
Note:
The Operating Income data used here is four times the quarterly (Dec. 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.
Fukuda Denshi Co (TSE:6960) 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, Fukuda Denshi Co's WACC % is 2.81%. Fukuda Denshi Co's ROIC % is 15.39% (calculated using TTM income statement data).
Fukuda Denshi Co 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.
Fukuda Denshi Co 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.
Fukuda Denshi Co ROIC % Related Terms
Thank you for viewing the detailed overview of Fukuda Denshi Co's ROIC % provided by GuruFocus.com. Please click on the following links to see related term pages.
Fukuda Denshi Co Ltd develops and manufactures medical electronic equipment. The firm operates in four segments: physiological diagnostic equipment, patient monitoring equipment, medical treatment equipment, and consumables and other products. The physiological diagnostic equipment business sells electrocardiographs, vascular screening systems, and blood cell counters. The patient monitoring equipment segment sells patient monitors and transmitters. The medical treatment equipment segment contributes the largest proportion of revenue and sells pacemakers and medical equipment for home treatment. The consumables and other products segment sells disposable electrodes and consumables used for the firm's devices. Fukuda Denshi generates the vast majority of its sales in Japan.
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