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Return on Invested Capital


Definition
ROIC. A measure of how effectively a company uses the money (borrowed or owned) invested in its operations. Calculated by: net income after taxes / (total assets less excess cash minus non-interest-bearing liabilities).

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The Correlation Between Improvements and ReturnsOur experience shows there's a positive correlation between improvements in a company's return on invested capital and its stock performance. More than anything, we're looking for inflections in busin ... Read more


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