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Return on Invested Capital (ROIC) is a financial metric that is widely used to measure the probability of gaining a return from an investment. It is used to assess how effectively a company uses its capital to generate profit; the higher the ROIC, the better.
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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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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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