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Return on Invested Capital (ROIC)

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Top Buys by Directors: Meyer's $310K Bet on ROIC
Forbes  May 9  Comment 
The directors of a company tend to have a unique inside view into the business, so when directors make major buys, investors are wise to take notice. Presumably the only reason a director of a company would choose to take their hard-earned cash...
ROIC Is Hitting on All Cylinders
TheStreet.com  May 6  Comment 
NEW YORK (TheStreet) -- In two weeks I will be attending the annual International Council of Shopping Centers RECon global conference in Las Vegas. While there, I will be conducting interviews with many leading retail REIT CEOs and other industry...
Goldman Sachs Upgrades Capital One Financial (COF) to Buy, Sees Return of Capital as Next Driver
StreetInsider.com  Jan 14  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Upgrades/Goldman+Sachs+Upgrades+Capital+One+Financial+%28COF%29+to+Buy%2C+Sees+Return+of+Capital+as+Next+Driver/8004614.html for the full story.
AOL Inc. (AOL) Special Dividend to Be Taxed as One-Time Return of Capital
StreetInsider.com  Nov 28  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Corporate+News/AOL+Inc.+%28AOL%29+Special+Dividend+to+Be+Taxed+as+One-Time+Return+of+Capital/7907171.html for the full story.
Retail Opportunity Investments Corp. (ROIC) Tops Q3 EPS by 4c
StreetInsider.com  Nov 1  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Earnings/Retail+Opportunity+Investments+Corp.+%28ROIC%29+Tops+Q3+EPS+by+4c/7834338.html for the full story.
UPDATE: Canaccord Genuity Upgrades Coach (COH) to Buy, Industry-Leading ROIC at a Discount
StreetInsider.com  Aug 7  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Upgrades/UPDATE%3A+Canaccord+Genuity+Upgrades+Coach+%28COH%29+to+Buy%2C+Industry-Leading+ROIC+at+a+Discount/7635720.html for the full story.
Retail Opportunity Investments Corp. (ROIC) Tops Q2 FFO Views; Maintains Outlook
StreetInsider.com  Aug 2  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Earnings/Retail+Opportunity+Investments+Corp.+%28ROIC%29+Tops+Q2+FFO+Views%3B+Maintains+Outlook/7624654.html for the full story.
[Member] ROIC Continues its Growth
Value Stock Guide  May 3  Comment 
Retail Opportunity Investment Corp (ROIC) continued building its shopping center portfolio. In Q1, the company added $75.3 million worth of new investments, increased its same center cash net operating income by 10% and increased its occupancy...
NZX Receives Confirmation From IRD For Return Of Capital
Mondo Visione  Apr 11  Comment 
NZX advises that IRD has today provided notice confirming that it considers that NZX’s proposed return of capital to shareholders on a pro rata basis, and cancellation of one in every ten shares held is not in lieu of a dividend and therefore...
NZX Receives Initial Orders For Return Of Capital
Mondo Visione  Mar 8  Comment 
On 20 February 2012, the Directors of NZX announced that the company would distribute cash by way of a return of capital to shareholders. On 6 March 2012, NZX filed documents with the High Court seeking initial orders in relation to the...




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Return on Invested Capital (ROIC) is used to judge how well companies generate earnings from capital invested in their business. It is essentially the return a company earns on each dollar invests in itself. ROIC is defined as Net Operating Profits Less Adjusted Taxes (NOPLAT) divided by the sum of Working Capital and fixed assets. Return on capital invested is a key driver of a business value (the higher it is, the higher the value) as it represents the return a company earns on its projects relative to its cost of capital.

ROIC = NOPLAT ÷ (Working Capital + Fixed Assets)


- Or -


ROIC = (EBIT * (1-T)) ÷ (Working Capital + Fixed Assets)


When a company's return on invested capital is greater than their cost of capital (commonly measured as the weighted average cost of capital, or WACC) they are creating value by investing in their projects. When this is not the case and company's WACC is greater than their ROIC they are said to be destroying value by investing capital in their business.

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