The Formula For Equity In A Combined Margin Account Is Return on Invested Capital (ROIC) – 4 Reasons to Use ROIC to Pick Profitable Stocks

You are searching about The Formula For Equity In A Combined Margin Account Is, today we will share with you article about The Formula For Equity In A Combined Margin Account Is was compiled and edited by our team from many sources on the internet. Hope this article on the topic The Formula For Equity In A Combined Margin Account Is is useful to you.

Return on Invested Capital (ROIC) – 4 Reasons to Use ROIC to Pick Profitable Stocks

Return on invested capital (ROIC) is one tool investors use to determine whether or not a company has a sustainable advantage over its competitors. Some investors call this sustainable competitive advantage a “moat.” Moat companies tend to dominate the industry niches in which they operate, and the stock market tends to reward investors in these companies with higher stock prices as they grow in their market niche.

Return on Invested Capital (ROIC) = Net Income After Taxes (NOPAT) / Capital Employed Return on invested capital is a good way for businesses that may be struggling because it measures how efficiently a business is using its existing cash to generate revenue. the profit it earns. If a company has a high return on invested capital, especially compared to its competitors, it is probably because the company has a more efficient way of producing its goods or services, or it can charge prices that allow it to make more profit. margin than its competitors.

Here are 4 reasons that make return on invested capital the metric you should use to screen out companies that can continue to deliver above-average growth:

1) Management Effectiveness – ROIC shows how well management is generating business profits compared to the amount of money they use to generate those profits

2) Clarifies the income statement – Instead of focusing solely on net income (the P/E ratio “E”), ROIC instead uses NOPAT, which removes (among other things) items such as investment income and interest expense, giving a much clearer picture of how how much profit the company actually makes as a result of its profit making

3) Using investment capital instead of just equity or assets (eg return on equity (ROE) or return on assets (ROA)), return on investment capital uses deployed equity AND debt capital and removes cash sitting in the bank. collecting interest on the account instead of generating income through the company’s operations

4) Companies with a high return on invested capital in their industry are generally leaders or emerging leaders in their market niche.

Using the ROIC formula above, you can prove what this article says by quickly visiting MSN Money and comparing the historical return on invested capital of Google and Yahoo (you probably used one of those search engines to find this article). If you look at the ROIC values ​​of these two companies and look at their relative stock price performance, the results can be enlightening.

Video about The Formula For Equity In A Combined Margin Account Is

You can see more content about The Formula For Equity In A Combined Margin Account Is on our youtube channel: Click Here

Question about The Formula For Equity In A Combined Margin Account Is

If you have any questions about The Formula For Equity In A Combined Margin Account Is, please let us know, all your questions or suggestions will help us improve in the following articles!

The article The Formula For Equity In A Combined Margin Account Is was compiled by me and my team from many sources. If you find the article The Formula For Equity In A Combined Margin Account Is helpful to you, please support the team Like or Share!

Rate Articles The Formula For Equity In A Combined Margin Account Is

Rate: 4-5 stars
Ratings: 1597
Views: 85989854

Search keywords The Formula For Equity In A Combined Margin Account Is

The Formula For Equity In A Combined Margin Account Is
way The Formula For Equity In A Combined Margin Account Is
tutorial The Formula For Equity In A Combined Margin Account Is
The Formula For Equity In A Combined Margin Account Is free
#Return #Invested #Capital #ROIC #Reasons #ROIC #Pick #Profitable #Stocks

Source: https://ezinearticles.com/?Return-on-Invested-Capital-(ROIC)—4-Reasons-to-Use-ROIC-to-Pick-Profitable-Stocks&id=2456850

Bài viết đã được tạo 2732

Bài liên quan

Bắt đầu nhập từ khoá bên trên và nhấp enter để tìm kiếm. Nhấn ESC để huỷ.

Trở lên trên