return on risk-adjusted capital (RORAC)

Definition

A tool used to analyze the risk involved in an investment by taking into consideration the amount of capital required. RORAC is an essential tool in risk management as it identifies the risk level of various investments, thereby providing businesses with the necessary information to decide the level of risk it is able to take.

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You should try and make sure that you get the most out of your return on risk-adjusted capital in every quarter.

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The return on risk-adjusted capital was a really good tool to use because it helped us out a lot in certain areas.

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The return on risk-adjusted capital was a great tool to use because the extraordinary size of the investment could skew the standard risk metrics.

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return on risk-adjusted capital (RORAC) Return on Sales