Return On Gross Invested Capital (ROGIC)
Metrics are only as good as the data that drive them. The best fundamental data in the world drives our metrics. Here’s proof from some of the most respected public & private institutions in the world.
Return on invested capital (ROIC) is not only the most intuitive measure of corporate performance, but it is also the best. It measures how much profit a company generates for every dollar invested in the company.
Return on gross invested capital (ROGIC) (seen in Figure 1) provides additional insights into the profitability of highly-capital intensive businesses. Depreciation policies may differ from firm to firm and can have a significant impact on both NOPAT and invested capital. ROGIC helps to minimize the impact of different depreciation policies and asset write-down policies.
Properly calculating ROIC, the primary driver of stock prices, is key to measuring a firm’s ability to generate returns on the capital invested in its business. Our Robo-Analyst technology allows us to perform the diligence needed to calculate an accurate ROIC and comparable metrics, such as ROGIC and GAAP-based ROIC.
Figure 1: How To Calculate Return on Gross Invested Capital (ROGIC)
Gross NOPAT / Average Gross Invested Capital
where
Gross NOPAT = (Net Operating Profit Before Tax + Depreciation and Amortization) * (1- Income Tax Rate)
Gross Invested Capital = Net Working Capital + Adjusted Fixed Assets + Accumulated Depreciation and Amortization
Sources: New Constructs, LLC
We make it easy for the average investor to leverage the benefits of a high quality ROIC model and see a clear picture of a firm’s true profitability.
This paper compares our analysis on a mega cap company to other major providers.
Want To Learn More?
Sign up to receive free alerts about all our new research reports including Long Ideas and Danger Zone picks.
See our webinar on importance of ROIC and how to calculate it.
Get our report: "ROIC: The Paradigm For Linking Corporate Performance to Valuation."