What is ROIC?
ROIC stands for Return on Invested Capital. It's a financial metric used to evaluate the efficiency of a company in generating returns from its capital.
How is ROIC calculated?
ROIC is calculated by dividing net operating profit after tax (NOPAT) by invested capital. The formula is: ROIC = NOPAT / Invested Capital.
Why is ROIC important for investors?
ROIC is important because it helps investors assess how well a company is using its capital to generate profits. A higher ROIC indicates more efficient use of capital.
What is a good ROIC percentage?
A good ROIC percentage typically varies by industry, but generally, a ROIC above 10% is considered favorable.
Can ROIC be used to compare companies?
Yes, ROIC can be used to compare companies within the same industry to determine which ones are more efficient at generating returns.
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