Return on Invested Capital and Return on Capital Employed are 2 ratios that investors utilize to examine a company's practicality as an investment. However what are they really?
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Timestamps:
00:00 – Introduction
01:23 – What Sets These 2 Values Apart
03:15 – Download: Must-Have Investing Checklist
03:22 – Question: Which Do You Believe Is More Prized Possession When Examining A Possible Financial Investment: ROIC Or ROCE?
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Return on Invested Capital vs Return on Capital Employed:
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With everything that is happening, most of us are a paycheck away from being homeless, hope we are all prepared, get yourself an alternate source of income
The most important thing that should be on everyone mind currently should be to invest in different sources of income that doesn’t depend on the government. Especially with the current economic crisis around the word. This is still a good time to invest in various stocks gold, silver and digital currencies.
You’re right! If you are not conversant with the markets, I’d advise you to get some kind of advice or assistance from a financial/investing coach. I diversified my $450K portfolio across various market with the aid of an investment advisor and I’ve been able to generate a little bit above $1.2m in net profit across high dividend yield stocks, Etf and bonds this red season. For me, its themost ideal way to jump into the market these days
@Levi Newson Hi, could you be kind enough to share the info
of the investment advisor guiding you?
@ErickPinto Sure, My Financial advisor is Lisa Paula martins. A middle aged lady from Arizona who really knows her stuff.
tbh i dont care much abt roic or roce as long as revenue profit cash flow gone up and the price reasonable to conservative value It is in my watchlist
The sound is low in this one uncle Phil! But thank you very much for these videos!
Will be working on that!
C’mon Phil I’m disappointed, knowing ROCE can be super useful especially now with increasing interest rates, a company that depends on low interest loans to generate revenue will see a dip in ROIC as interest rates go up (as cost of capital increases)
Thank you for your feedback!
thanks a lot
Phil your audio is a bit amateurish it’s sub-par when compared with all other aspects of your video.
So if u want to improve something – go for the audio.
Just get a mike.
Just a thought.
Wouldn’t the cost of capital simply be the interest rate that a company pays on any debt it takes?
So Google would have a very low cost of capital — they can get money with a very low interest rate of like 3-4% (it may have went up recently though).
Whereas a company with a poor credit rating may have a higher cost of capital and have to pay like 10-15% on any money it borrows.
That’s what Ive been thinking. It’s not a random number but a clear percentage shared by the bank. Or we are missing out on something here ?
I’ll stick with Return on Investment. I’m lazy and a simple value investor! Amen brother, ignoring financial planners and investment bankers is always wise! 😅
It seems to me that ROIC is more practical to ROCE, because ROIC is compared to zero, which is simple enough. But if both use EBIT in the numerator, that is Earnings before Interest and Taxes, I am a little confused. Why not Income after Interest and Taxes, simply the Cash Flow divided by the invested capital 🤷
Thanks for responding!
Do you even think it’s valuable to take a look at Return on Capital Employed? Or do you think it’s just a fiction of business school imagination?
You sound like your talking out of tin can phil. Use Airpods or a proper mic. Thanks!
Where on the financial statements can you get the Invested Capital?