New analysis

ROIIC

noun · return on incremental invested capital
Definition

(NOPAT_y5 − NOPAT_y0) / (Invested Capital_y5 − Invested Capital_y0). The return on the next dollar reinvested.

Why it matters

Companies whose ROIIC stays high have a long runway for compounding inside the business.

¬ Damodaran on Capital Allocation

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