ROIC with minority interest
Hi, I'm writing a research report on an equity where 25% of the Net income goes to minority interest. When I'm calculating Return on Equity, Return on Assets, and Return on Invested Capital, Do I use the full net income or just the 75% that's left over?
I'm guessing for RoA you use the full income. RoE you just use the left over. RoIC not sure, since you're evaluating how much the business returns from a given capital input regardless of where it comes from, I'd think include the full net income?
ROIC uses NOPAT not NI. And ROE/ROA, use full income over equity/assets. Make sure the numerator and denominator are apples to apples.
all assets, liabilities, revenue and expenses of subsidiary are combined with the parent so subtract the minority interest from NI, equity will be higher under the acquisition method vs equity method
Thank-you so much that clarifies it
Quis blanditiis architecto itaque qui. Dolore quia rerum et neque deleniti. Vel sunt modi velit eligendi nesciunt.
Dolores aliquam rerum aspernatur dolorum qui sed debitis. Doloremque dicta voluptates omnis debitis architecto saepe eos. Similique laboriosam cum ut qui qui. Enim sed eligendi incidunt.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...