ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Orix Jreit's annualized return on invested capital (ROIC %) for the quarter that ended in Aug. 2023 was 2.69%.
As of today (2024-05-12), Orix Jreit's WACC % is 1.50%. Orix Jreit's ROIC % is 3.22% (calculated using TTM income statement data).
Orix Jreit 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.
Orix Jreit ROIC % Historical Data
The historical data trend for Orix Jreit'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.
For the REIT - Office subindustry, Orix Jreit'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.
Orix Jreit's ROIC % Distribution in the REITs Industry
For the REITs industry and Real Estate sector, Orix Jreit's ROIC % distribution charts can be found below:
* The bar in red indicates where Orix Jreit's ROIC % falls into.
Orix Jreit ROIC % Calculation
Orix Jreit's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Aug. 2023 is calculated as:
Note:
The Operating Income data used here is two times the semi-annual (Aug. 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.
Orix Jreit (TSE:8954) 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, Orix Jreit's WACC % is 1.50%. Orix Jreit's ROIC % is 3.22% (calculated using TTM income statement data).
Orix Jreit 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.
Orix Jreit 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.
Orix Jreit ROIC % Related Terms
Thank you for viewing the detailed overview of Orix Jreit's ROIC % provided by GuruFocus.com. Please click on the following links to see related term pages.
Orix Jreit Inc is a real estate investment trust engaged in the acquisition, ownership, and leasing of properties throughout Japan. In terms of asset acquisition price, the majority of the company's real estate portfolio comprises office buildings. Retail facilities and residential properties together also make up a considerable percentage of this portfolio. Orix JREIT's real estate assets are mostly located in the Greater Tokyo area, with those in the Central Wards of Tokyo representing the largest geographic segment in terms of property acquisition price. The company derives nearly all of its income in the form of rental revenue from tenants. Finance and real estate, transportation, and retail companies are Orix JREIT's major customers.
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