Question
There are numerous examples of successful investment decisions made using ROIC. For instance, Warren Buffet, a renowned investor, often uses ROIC to evaluate the efficiency of companies before investing. He has made successful investments in companies like Coca-Cola and Apple, which have high ROIC. Another example is the investment firm, Greenblatt's Gotham Capital, which uses ROIC as a key metric in their investment strategy. They have successfully invested in companies like Microsoft and Johnson & Johnson based on their high ROIC.
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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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