OK so if for ROIC, Invested Capital is just capital from issuing shares to raise cash, and debt to raise cash to invest. If a company became profitable and then only reinvested its own profits for 30 years and grew earnings year after year without taking any new debt or issuing any new shares.... Would its ROIC Operating Income/Invested Capital not balloon to some enormous number over time like 230000% if the denominator never grew? But any companies ROIC I see is typically <100% unless its an extreme outlier. Is this just because all companies tend to end up continuing to take out debt to allow more investment which grows the denominator in that equation? Or have I totally misunderstood how this is calculated and what it means?
And what is different about ROIC and ROCE and why would it matter?
Submitted April 25, 2024 at 11:55PM by 1PrestigeWorldwide11 https://ift.tt/dolSRjy
