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Some alternative methods to compare the efficiency of capital use between companies include comparing financial ratios such as Return on Equity (ROE), Return on Assets (ROA), and Debt to Equity ratio. Additionally, you can also compare the Earnings Before Interest and Taxes (EBIT) and Earnings Per Share (EPS). These methods provide a comprehensive view of how efficiently a company is using its capital.
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Need help with which companies or projects to invest in? As a key driver of value in business, ROIC measures how well the company deploys its capital....
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Do you need to weigh up several investment projects or public companies to invest in? This spreadsheet compares the efficiency of capital use between companies based on assumptions of Return on Invested Capital (ROIC), reinvestment rate and valuation multiples. Then, net income and equity value forecasts are derived and returns are compared over the long term by the company. The sensitivity of returns to the core assumptions is also provided.
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