Purchase Solution

Finance - Return on Invested Capital (ROIC)

Not what you're looking for?

Ask Custom Question

Tibbs Inc. has the following information for the current year: Net income = $300;
Net operating profit after taxes (NOPAT) = $400; Total assets = $2,900; Short-term investments = $200;
Stockholders equity = $1,800; Debt = $700; and Total net operating capital = $2,300.
What is the Return on invested capital (ROIC) for the current year?

a. 13.0%
b. 13.8%
c. 16.0%
d. 17.4%
e. 22.2%

Purchase this Solution
Solution Summary

This solution sorts through the extra information given in the problem statement to find the key data that is pertinent to the calculation of ROIC. Some of the information in the problem is redundant allowing the student an extra check on their work.

Solution Preview

Return on Invested Capital is calculated as (Net Operating Income After Taxes)/(Invested Capital). The problem statement provides the numerator, NOPAT. (Do not be tempted to use Net Income. Net income includes Non-Operating Income, usually interest and income from ...

Purchase this Solution
Free BrainMass Quizzes
Basics of corporate finance

These questions will test you on your knowledge of finance.

Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.

Operations Management

This quiz tests a student's knowledge about Operations Management

Six Sigma for Process Improvement

A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.

View More Free Quizzes
Related BrainMass Solutions

  • Capital Structures to Maximize the Return on Equity

    214971 Finance ROE = ROIC + (ROIC - i')D/E. Assume your company has a return on invested capital of 12%. Also assume your borrowing costs will rise as you employ more debt in your capital structure.

  • Dupont method and ROIC

    EBIT X SALES = RETURN ON SALES INVESTED CAPITAL INVESTED CAPITAL (ROIC) 5.

  • Return on invested capital and Return on equity

    The solution contains step by step workings of computation of return on invested capital and return on equity.

  • Internal Management Tools, RNOA, NOPAT Sales, and Stress Tests

    What is an example of return on invested capital being used as an internal management tool? First, return on invested capital measures an organization's efficiency as regards the allocation of capital to different investment choices.

  • Cost of Capital for Finance Households

    If on the other hand the return on invested capital (ROIC) is less than the firm's WACC, then the firm has destroyed its value.

  • Internal Gaming Technology: Evaluation of Liquidity

    Return on invested capital For the covered periods, the return on invested capital registered numbers all in the north; however, 2009 recorded the lowers return on invested capital at 0.52%.

  • Growth and Return on Invested Capital, Required Rate of Return, Competition

    256529 Growth and Return on Invested Capital 3. How does growth and return on invested capital drive free cash flow? Illustrate with an example employing constant and non-constant growth rates. 7.

  • ROE, ROC, IRR-Acme

    Retun on Equity versus Return on Capital Definition of Retun on Capital/ Return on Invested Capital: Return on capital, also known as Return On Invested Capital (ROIC) is defined as NOPLAT / Invested Capital (usually expressed as a percentage

  • stakeholder value maximization

    In reference to the textbook, explain the concept of ROIC. ROIC stands for return on invested capital. This is a financial measure that expresses in quantitative terms how well a company generates cash flow relative to the capital it has.

View More Related Solutions