Have been getting questions on ROIC in interviews and have been trying to understand it better both mechanically and intuitively but feel like I see variety of different posts about it and still have questions... Appreciate if anyone could help confirm a few outstanding Qs I have
- What is the typical time frame investors look at? Is it next 4 quarters NOPAT vs. current invested capital on the balance sheet? Or do people typically look historically
- Does ROIC consider the price of the security at all? Looks like its based on the balance sheet so I think mechanically the answer is no, but if you want to look at ROIC > WACC as a metric to confirm a good investment, where does the price of the stock in the market factor in? Or am I missing something here
- What is the specific formula you all use for invested capital for public companies? Is it simply net debt + shareholder's equity from the latest balance sheet?
