Return on Invested Capital Measuring Profitability Roi is an indicator of compan profitability ROl relates key summary measures: profits with financing Rol conveys return on invested capital from different financing perspectives
Return on Invested Capital Measuring Profitability • ROI is an indicator of company profitability • ROI relates key summary measures: profits with financing • ROI conveys return on invested capital from different financing perspectives
Return on Invested Capital Assists in Forecasting Earnings ROI links past, current, and forecasted earnings with invested capital Rol adds discipline to forecasting ° ROI helps identify optimisticor pessimistic forecasts Rol aids in evaluating prior forecast performance
Return on Invested Capital Assists in Forecasting Earnings • ROI links past, current, and forecasted earnings with invested capital • ROI adds discipline to forecasting • ROI helps identify optimisticor pessimistic forecasts • ROI aids in evaluating prior forecast performance
Return on Invested Capital For Planning and Control ROI assists managers with: · Planning Budgeting Coordinating activities Evaluating opportunities Control
Return on Invested Capital For Planning and Control ROI assists managers with: • Planning • Budgeting • Coordinating activities • Evaluating opportunities • Control
Components of Rol Definition Return on invested capital is defined as ncome Invested capital
Components of ROI Definition Return on invested capital is defined as: Invested capital Income
Components of ROL Invested Capital Defined No universal measure of invested capital exists Different measures of invested capital reflect different financiers perspectives
Components of ROI Invested Capital Defined • No universal measure of invested capital exists • Different measures of invested capital reflect different financiers’ perspectives