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The importance of ROIC

A business only generates value if the return on capital invested in the business exceeds the cost required for it. The same applies to growth, which in itself only generates value if the return on reinvested capital exceeds the required return. Opposite to ROE (Return on Equity) , ROIC (Return on Invested Capital) is not subordinated to financing decisions. Analyst Eeemeli Oikarainen explains.

Contents:
00:00 Introduction
00:15 Why should one be interested in ROIC?
01:20 Business metrics
02:02 Formula
04:30 ROE: Retun on Equity
06:35 ROI: Return on Investment
07:43 Margins
09:25 Differencies between industries
11:15 Perfect business in terms of ROIC

Read more in the article: 
The DuPont formula helps understand the dynamics of value creation by Eemeli Oikarainen.

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