So conventionally ROIC or ROCE would be calculated including Goodwill and Intangible assets in the denominator to give a supposedly true computation of a company's operating efficiency, however I've heard many people say that since a company doesn't necessarily have to reinvest in its intangible assets then you can deduct from the company's assets? The logic being that as an investor the most interesting thing about a company is its free cash flow generation efficiency. Any thoughts on the pros and cons of this?
If an analyst uses EBIT or net income in the numerator should they then deduct amortisation?
Also Goodwill - if a company funded the acquisition without debt would it be fair to deduct Goodwill from assets also?