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Return on invested capital formula ROIC = NOPAT / Average Invested Capital There are three main components of this measurement that are worth noting: While ratios such as return on equity and return on assets use net income as the numerator, ROIC uses net operating income after tax (NOPAT), which means that after-tax expenses (income) from financing activities are added back to (deducted from ...
Net Income = pre-tax income after taxes; Equity = shareholders' equity; EBIT = Earnings before interest and taxes; Pretax Income is often reported as Earnings Before Taxes or EBT; This decomposition presents various ratios used in fundamental analysis. The company's tax burden is (Net income ÷ Pretax profit). This is the proportion of the ...
Return on tangible equity ( ROTE) (also return on average tangible common shareholders' equity ( ROTCE )) measures the rate of return on the tangible common equity. ROTE is computed by dividing net earnings (or annualized net earnings for annualized ROTE) applicable to common shareholders by average monthly tangible common shareholders' equity. [1]
The net present value ( NPV) or net present worth ( NPW) [1] is a way of measuring the value of an asset that has cashflow by adding up the present value of all the future cash flows that asset will generate. The present value of a cash flow depends on the interval of time between now and the cash flow because of the Time value of money (which ...
The return on equity ( ROE) is a measure of the profitability of a business in relation to its equity; [1] where: Thus, ROE is equal to a fiscal year 's net income (after preferred stock dividends, before common stock dividends), divided by total equity (excluding preferred shares), expressed as a percentage. Because shareholder's equity can be ...
A financial ratio or accounting ratio states the relative magnitude of two selected numerical values taken from an enterprise's financial statements. Often used in accounting, there are many standard ratios used to try to evaluate the overall financial condition of a corporation or other organization. Financial ratios may be used by managers ...
Cash return on capital invested [1] ( CROCI) is an advanced measure of corporate profitability, originally developed by Deutsche Bank 's equity research department in 1996 (it now sits within DWS Group ). This measure compares a post-tax, pre-interest cash flow to the gross level of capital invested and is a useful measure of a company’s ...
Hamada's equation. In corporate finance, Hamada’s equation is an equation used as a way to separate the financial risk of a levered firm from its business risk. The equation combines the Modigliani–Miller theorem with the capital asset pricing model. It is used to help determine the levered beta and, through this, the optimal capital ...