ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Bayerische Motoren Werke AG's annualized return on invested capital (ROIC %) for the quarter that ended in Jun. 2024 was 4.75%.
As of today (2024-10-31), Bayerische Motoren Werke AG's WACC % is 2.48%. Bayerische Motoren Werke AG's ROIC % is 5.23% (calculated using TTM income statement data).
Bayerische Motoren Werke AG 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.
Bayerische Motoren Werke AG 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 Bayerische Motoren Werke AG's ROIC %
For the Auto Manufacturers subindustry, Bayerische Motoren Werke AG'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.
Bayerische Motoren Werke AG's ROIC % Distribution in the Vehicles & Parts Industry
For the Vehicles & Parts industry and Consumer Cyclical sector, Bayerische Motoren Werke AG's ROIC % distribution charts can be found below:
* The bar in red indicates where Bayerische Motoren Werke AG's ROIC % falls into.
Bayerische Motoren Werke AG ROIC % Calculation
Bayerische Motoren Werke AG's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Dec. 2023 is calculated as:
Note:
The Operating Income data used here is four times the quarterly (Jun. 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.
Bayerische Motoren Werke AG (XTER:BMW) 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, Bayerische Motoren Werke AG's WACC % is 2.48%. Bayerische Motoren Werke AG's ROIC % is 5.23% (calculated using TTM income statement data).
Bayerische Motoren Werke AG 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.
Bayerische Motoren Werke AG 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.
Bayerische Motoren Werke AG ROIC % Related Terms
Thank you for viewing the detailed overview of Bayerische Motoren Werke AG's ROIC % provided by GuruFocus.com. Please click on the following links to see related term pages.
In addition to being one of the world's leading premium light-vehicle manufacturers, BMW Group produces BMW motorcycles and provides financial services. Premium light-vehicle brands include BMW, Mini, and ultraluxury brand Rolls-Royce. Operations include 31 production facilities in 15 countries, research and development facilities in 17 countries, and a sales network reaching over 140 countries. In 2023, worldwide sales volume was over 2.5 million automobiles and over 209,000 motorcycles.
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