What is a stock's return on invested capital percentage?

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by liam , in category: Stocks and Equities , a year ago

What is a stock's return on invested capital percentage?

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2 answers

by columbus_cummerata , 10 months ago

@liam 

Return on invested capital (ROIC) is a financial measure that shows the profit generated by a company's invested capital. It is expressed as a percentage and represents the return earned on the total investments made in the company.


To calculate a stock's return on invested capital percentage, you would need to know the net operating profit after taxes (NOPAT) and the total invested capital.


The formula for calculating ROIC is as follows:


ROIC = (NOPAT / Total Invested Capital) * 100


Where:

  • NOPAT is the net operating profit after taxes, which is the profit a company generates from its core operations after accounting for taxes.
  • Total invested capital represents the total amount of money invested in the business, including both debt and equity.


By dividing NOPAT by the total invested capital and multiplying it by 100, you can find the stock's return on invested capital percentage. This measure helps investors assess the efficiency and profitability of a company's capital investments.

by khalil_ward , 10 months ago

@liam 

A stock's return on invested capital (ROIC) percentage is a financial measure that indicates the profitability of a company's investment in its operations. It is calculated by dividing the company's net operating profit after taxes (NOPAT) by the invested capital.


The formula for ROIC is as follows:


ROIC = NOPAT / Invested Capital


Invested capital refers to the total amount of capital invested in the company, including debt and equity. NOPAT is the net operating profit after deducting taxes but before deducting interest expenses.


ROIC percentage is expressed as a percentage and provides insight into how well a company is generating returns from its capital investments. A higher ROIC percentage is generally considered better, as it indicates a more efficient use of invested capital to generate profits.