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RETURN ON INVESTED CAPITAL AND PROFITABILITY ANALYSIS, SIGIT BUDY PRASETYA…
RETURN ON INVESTED CAPITAL AND PROFITABILITY ANALYSIS
Importance of Return
on Invested Capital
Managerial
effectiveness
Profitability
Planning and control
Analysis of company performance demands joint analysis, where we assess one measure relative to another. The relation between income and invested capital, referred to as return on invested capital (ROIC)
Components of Return
on Invested Capital
Defining invested
capital
Analytical
adjustments
Computing return
Return on Net Operating Assets (RNOA
Disaggregated Return on Net Operating Assets
Return on Common Equity
Disaggregated Return on Common Equity
Return on common shareholders’ equity (ROCE), or simply return on common equity, is of great interest to the shareholders of a company. Creditors usually receive a fixed return on their financing. Preferred shareholders usually receive a fixed dividend. Yet common shareholders are provided no fixed or promised returns.
Analyzing Return on Net Operating Assets
Disaggregating return on net operating assets
Profit margin and
asset turnover
Profit margin
analysis
Asset turnover
analysis
Analyzing Return on
Common Equity
Disaggregating
ROCE
Computing returns
Financial leverage
Assessing equity
growth
SIGIT BUDY PRASETYA (F0319132