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8 November 2012

ROIC: Definition And Formulae For Return On Invested Capital

ROIC is the true measure of a company’s cash on cash returns.

Formula: NOPAT/Invested Capital or NOPAT/Revenue * Revenue/Invested Capital.

It is the most important and truest measure of profitability. It is the key variable in calculating economic earnings.

Here are details on the numerous footnotes adjustments we make to NOPAT and Invested Capital to ensure the best ROIC in the business.

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