Quarterly Return on Invested Capital (QoQ ROIC)
factor.formula
Quarterly Return on Invested Capital (QoQ ROIC):
Adjusted earnings before interest and taxes (EBIT_{adj,Q}) for the quarter:
Ending invested capital (InvestedCapital_{end}):
Ending interest-bearing debt (InterestBearingDebt_{end}):
The parameters are explained as follows:
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Adjusted EBIT for a single quarter represents the company's operating profit before interest and taxes in a specific quarter. The use of adjusted EBIT is intended to exclude the interference of non-recurring gains and losses and better reflect the company's sustainable profitability.
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Quarterly operating profit refers to the profit generated by a company's main business in a specific quarter.
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The interest expense for a single quarter is the interest expense incurred by a company on its borrowings in a specific quarter.
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Assuming a tax rate, here we use 25% as the assumed tax rate, which is a common assumed tax rate. When actually used, the company's actual effective tax rate can be used or adjusted according to the industry average tax rate.
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The capital invested at the end of the period refers to all the capital invested by the company for operation at the end of the reporting period, including shareholders' equity and interest-bearing liabilities.
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Total shareholders' equity at the end of the period represents the equity held by shareholders in the company at the end of the reporting period.
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Interest-bearing liabilities at the end of the period refer to debts that the company needs to pay interest on at the end of the reporting period, including short-term loans, long-term loans, bonds payable and long-term liabilities due within one year.
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Short-term loans at the end of the period refer to the balance of the company's short-term loans at the end of the reporting period.
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End-of-period long-term loans refer to the company's long-term loan balance at the end of the reporting period.
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Bonds payable at the end of the period refers to the balance of bonds issued by the company at the end of the reporting period.
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Non-current liabilities due within one year at the end of the period refer to long-term debts that the company needs to repay within one year at the end of the reporting period.
factor.explanation
The quarterly return on invested capital (QoQ ROIC) is an indicator that measures the efficiency of a company's invested capital in generating profits in a single quarter. It reflects the company's ability to use capital to make profits by calculating the ratio of adjusted EBIT (excluding the impact of the assumed tax rate) to the invested capital at the end of the period. Compared with the annual ROIC, QoQ ROIC can provide a more timely and dynamic assessment of a company's profitability, helping investors grasp the changing trend of the company's short-term operating conditions. A high QoQ ROIC usually means that the company has high capital utilization efficiency and strong profitability.