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ROCE is used to prove the value the business gains from its assets and liabilities. Companies create value whenever they are able to generate returns on capital above the weighted average cost of capital (WACC). [3] A business which owns much land will have a smaller ROCE compared to a business which owns little land but makes the same profit.
ROIC = NOPAT / Average Invested Capital There are three main components of this measurement: [2] While ratios such as return on equity and return on assets use net income as the numerator, ROIC uses net operating income after tax (NOPAT), which means that after-tax expenses (income) from financing activities are added back to (deducted from) net income.
Real Estate Investment Trusts (REITs) commonly make distributions equal to the sum of their income and the depreciation (capital cost allowance) allowed for in the calculation of that income. The business has the cash to make the distribution because depreciation is a non-cash charge.
The investment with the largest ROI is usually prioritized, even though the spread of ROI over the time period of an investment should also be taken into account. Recently, the concept has also been applied to scientific funding agencies’ (e.g., National Science Foundation ) investments in research of open source hardware and subsequent ...
This measure compares a post-tax, pre-interest cash flow to the gross level of capital invested and is a useful measure of a company’s ability to generate cash returns on its investments. In principle, this ratio is similar to the ROE ratio, but CROCI is calculated on a cash basis and on an EV -basis, taking into account assets funded by all ...
In basic terms, marketing ROI (MROI) measures the return on investment (ROI) from the amount a company spends on marketing and advertising. You can calculate marketing ROI in a few ways, but the ...
Capitalization rate (or "cap rate") is a real estate valuation measure used to compare different real estate investments. Although there are many variations, the cap rate is generally calculated as the ratio between the annual rental income produced by a real estate asset to its current market value. Most variations depend on the definition of ...
In finance, return is a profit on an investment. [1] It comprises any change in value of the investment, and/or cash flows (or securities, or other investments) which the investor receives from that investment over a specified time period, such as interest payments, coupons, cash dividends and stock dividends. It may be measured either in ...