Boost Your Investment Returns with the ROIC Formula
What is Return on Invested Capital (ROIC)?
Return on Invested Capital (ROIC) is a profitability metric used to measure how effectively a company uses its invested capital to generate profits. To calculate ROIC, the after-tax operating income of a company is divided by its total invested capital. ROIC can be used to compare a company’s financial performance over time and to other firms in the same industry. A higher ROIC indicates more efficient use of capital, which can lead to better returns for investors.
Maximizing ROIC
To maximize ROIC, companies should focus on increasing their return factors while minimizing negative factors. To maximize return, companies should strive to increase operating margins and reduce the invested capital. Additionally, they should focus on driving sales growth while reducing their operating expenses. Companies should also aim to increase their net income and lower their cost of capital. Lastly, they should strive to leverage their assets responsibly in order to increase returns whilst minimizing any risks associated with the assets. By utilizing these strategies, companies can effectively maximize their ROIC and generate better returns for investors.
How can MarketXLS Help?
MarketXLS is a data and analytics software platform designed to automate investment decisions. It helps investors and traders uncover actionable insights, unlock hidden opportunities, and make more informed trading decisions. MarketXLS provides market data and analytics, such as real-time market and news data, fundamentals, technical analysis, and stock and financial market reports. Additionally, it offers comprehensive automated analytics and trading tools, like risk/return analysis, to provide investors with critical data for informed decision making. MarketXLS can also help automate portfolio management decisions and save both time and money when it comes to investment decisions.
The Return on Invested Capital function on MarketXLS is given as:
=ReturnOnInvestedCapitalOneYear(“MSFT”)
=ReturnOnInvestedCapitalQuarter(“MSFT”)
MarketXLS provides several functions that can be useful for analyzing ROIC, including:
| Function Title | Function Example | Function Result |
|---|---|---|
| Invested Capital | =hf_Invested_Capital(“MSFT”,2022) – Returns the value for the year 2022. =hf_Invested_Capital(“MSFT”,2022,2) – Returns the value for the year 2022 and the calendar quarter 2 =hf_Invested_Capital(“MSFT”,2022,3,”TTM”) – Returns the value for the year 2022 and trailing twelve months from the calendar quarter =hf_Invested_Capital(“MSFT”,”lq”) – Returns the value for the last quarter =hf_Invested_Capital(“MSFT”,”lq-1″) – Returns the value for the last quarter-1 =hf_Invested_Capital(“MSFT”,”ly”) – Returns the value for the last year =hf_Invested_Capital(“MSFT”,”ly-1″) – Returns the value for the last year – 1 =hf_Invested_Capital(“MSFT”,”lt”) – Returns the value for the last 12 months. =hf_Invested_Capital(“MSFT”,”lt-1″) – Returns the value for the previous last 12 months. |
Return on invested capital (ROIC) measures how well a firm uses its capital to generate profits. |
| Return on Invested Capital (TTM) | =ReturnOnInvestedCapitalOneYear(“MSFT”) | It is a metric which shows profit generated per value of capital employed in a last 12 months |
| Average True Range | =AverageTrueRange(“MSFT”) – Returns ATR value for 14 day period =AverageTrueRange(“MSFT”,30) – Returns ATR value for 30 day period =AverageTrueRange(“MSFT”,30,”9/1/2022″) – Returns ATR value for 30 day period with start date 1 September 2022 |
A stock with a high level of volatility has a higher ATR, and a low volatility stock has a lower ATR. |
Use AI driven search for all functions on MarketXLS here: https://marketxls.com/functions
Download from the link below, a sample spreadsheet created with MarketXLS Spreadsheet builder
Note this spreadsheet will pull latest data if you have MarketXLS installed. If you do not have MarketXLS consider subscribing here
https://mxls-templates.s3.us-west-2.amazonaws.com/MarketXLS-Model-ID-lIOpyY.xlsx
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