Question about ROIC
So I was wondering what people use as their calculation for roic since I’m learning it is a very important metric for an investment. I’m confused if roic is pertaining invested capital into the business or invested capital used by the business. I ask this because when you look up roic you get ebit / book value of debt + book value of equity (this would pertain to capital invested into the business - this is also the calc from the rosenbaum & pearl book). However, I’ve seen people define roic as ebit / working capital + net equipment (pertaining to capital invested into the business for operations). I feel like the second one shows a more true picture of the business as it pertains more to the operations, but I can see why an investor would also care about the return on capital invested to fund the business. So I’m just curious which view of roic is used in the real world
Bump
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