How to Calculate ROIC Return on Invested Capital

[@Piggy991]

Swear to god you are the only person on youtube who can explain it to lay person. Thanks!

[@Viper4ever05]

Great video! I like how you used an actual financial statement to guide the calculation.

[@debiasi88]

Great video... same comments as below. No one gives an example with actual financial statements. Thanks!

[@furkanoztanriseven8270]

How about cash and cash equivalents? Shouldn't they be subtracted from debt plus equity?

[@bennykhoo99]

3 years ago from your blog. How about the missing cash related to Cash from Investing and Financing while computing ROIC?

[@andrebastos3362]

Shouldnt you have used previous years balance sheet? 2018 income statement and 2017 BS?

[@NoRegertsHere]

Yep.

[@baotu88]

Very well explained. this helped me greatly. subscribed! thanks

[@judethedude9542]

Has anyone manually calculated the Hasbro ROIC% for 2017 and 2016. I followed the same steps and came up with 2017: 11.11% and 2016: 18.76% . Can someone confirm please what is correct?

[@retamozotomasdavid381]

Short term borrowing is short term debt??this is correct?

[@juanvicencio2390]

thanks for the video! I have a question, What is the point behind excluding interest? If NOPAT is what the company would have earned if it had no debt...what is the point behind using a value that ignores what you paid to raise that debt? Shouldn't be more accurate (and conservative) to include what you had to pay for that debt (debt that you ultimately used to generate capital)

[@varund4862]

ROIC actually helps us when we are comparing firms with different capital structure (Debt-equity ratios). It helps identify the firms which are utilizing their capital better.

[@luvgun2687]

Is it possible to Calculate ROIC in each trimester ?

[@kidze73]

hi Mr Growth CFO, what do you think about the notion of subtracting Cash and Cash Equivalents from Invested Capital? Is it necessary? Does it make sense or helpful in some way in terms of meaning? Why other question is, if the company decides to reinvest part of their NOPAT this year, or borrow more debt or raise capital. Can I define that "extra" investment by taking the increase in Invested Capital over the year?

[@justblaze73]

He should have subtracted the Cash & Cash Equiv. (or technically, maybe 98% of it) out. He didn't and now misled everyone who watched the video.

[@every1readthis]

Thank you so much for this great video. There are smarter people because of you! 😊

[@justinlow9958]

NOPAT = Net Operating Profit After Tax

[@clovelly1606]

Great! So clearly explained. A big thank you to you.

[@k4ir0s]

Why do we only use interest bearing debt to make the calculation? Aren't things like Account's Payable and Accrued Expenses almost equivalent to debt? It seems that companies can manipulate their balance sheet to make it appear that they have low debt by simply inflating their Account's Payable and Accrued Expenses knowing that stock pickers will just look at interest bearing debt. I'm new to accounting --does this make sense?

[@Matsoni85]

Money that has no expense dont count. Its just dead money and cost of capital. This is all theoritical mate and good on you for thinking your self

[@tristanxunger]

I'm surprised this video is not ranked higher. Did a fantastic job explaining ROIC and the fundamentals of calculating it.

[@davimonteiro5895]

Fantastic explanation! Thx for using the financial statement to teach it, that was exactly what I was looking for!

[@AnaroseLeyte]

thanks sir very understandable

[@lakmalgamage1539]

thank you very much sir...

[@angelbless45]

Thank you for the explanation! Just one question, shouldn't we use the IC from previous year? I mean, IC in year t=0 will see its return on t=1, right?

[@ammarkhan3478]

I have the same question, please reply if you get the answer.

[@NoRegertsHere]

Yeah. Use IC from previous year. Some use the average over the year. But really, it’s the end of the year before that’s best

[@StockTalkwithNikoKritikos]

Do you think ROIC is a better metric than ROE or ROA?

[@stockjanitor]

theres a contradiction though,, if company A has high roic, low roa and/or low roe, and has been performing like this for years vs company B has low roic, high roa and/or high roe, and also performing like this for years, assume same industry category clearly higher roe makes shareholder more money?

[@strfrieue]

thank you sir!!

[@oybek1982]

Very simple explanation using the exact financial statement! Thank you, keep going--!

[@retamozotomasdavid381]

Short term borrowing is short term debt?this is correct??please can you answer me?

[@jyotibarman1247]

@@retamozotomasdavid381 yes you're correct ST borrowing and ST debt is same

[@EmiCiappi]

You are great!!! Very easy to understand and very easy to understand how you can use the ROIC!! Cheers from China!

[@Yourworstnightmare03]

Great video, easy to follow and helped me understand ROIC calculations and the meaning of them!

[@davidj2616]

Great video! clearly-explained.

[@nivedvats]

Thanks a ton for explaining it so well with an example. Please make a similar video on ROCE.

[@ada7831]

How to calculate banks NOPT as they don't have operating profits in their income statement?

[@omkarkawatgi88]

If I am not wrong you called "49,000" 49Million!

[@Warrencio]

Sir please make a video on how to calculate WACC. Thank you

[@ahmedzakikhan7639]

What about Cash ?

[@maldighaithir]

Hi Do you consider Commercial papers in the short term debt? usually it is a non interest bearing debt thank you

[@hit3212]

Shouldn't cash be deducted from the calculation of invested capital?

[@cesarricardopaccotorres8300]

Muy bien video; gracias a Google por implementar el traductor de video que me ayudo a entender el video. Viva el desarrollo tecnológico. Y, también, gracias a ti Bro, por este grandioso video.

[@saulyabarbedoya767]

Well done! I was looking for a video who could help me. Regards from Peru.

[@parthaaec07]

Great explanation of ROCE. Thanks.

[@turkebalamash5955]

Thank you

[@Matsoni85]

the best

[@TSC369]

Thanks a lot for sharing your clearcut demo on finding the ROIC! I notice that the Income Statement clearly shows $49,968.00 as Income Tax Expense whereas you've taken $49,978.00 to calculate the Tax Rate! Input error? 🤔🤔🤔

[@NoRegertsHere]

Income tax expense isn’t the same as tax rate.

[@khalidfr173]

Thank you, simple and clear.

[@leticiajuarez2856]

You just saved my life and my project! 😝 so easy after I watched your video!! Thank you!

[@MichaelPriceOfficial]

When I look up Incomes taxes for Hasbro in 2018 on TD Ameritrade's site it says it's 9,000,000. Not $49,968. Can you confirm that you made an error?

[@retamozotomasdavid381]

Short term borrowing is short term debt. This is correct??please can you answer me?

[@cashflowyield]

Great video! Thank you.

[@marcelomorais6891]

Well explained. Thank you for share this video for free. It helped me a lot.

[@Bernoulliflyer]

Thank you for a very clear explanation.

[@dannyboy1533]

Thank you for creating this video.

[@abhishekjoshi7908]

Don't we need to subtract cash?

[@aoihyoudou]

thank you from the bottom of my heart 😭

[@richardsalley9848]

Very helpful! Thank you!

[@andresw1331]

ROIC Is similar than ROCE?

[@wirsyt]

Very comprehensive video!

[@Erez.Levi.Stocks]

Amazing explain, thanks

[@richardgordon]

Brilliantly explained! Thank you!

[@SahilSingh-jv6jg]

Perfectly explained!

[@sudeshnabora524]

What happens if the net income is negative . How do we find the tax rate then ?

[@carlfroberg]

Well if the net income is negative you shouldn't invest in the company in the first place.

[@rzv_sd3720]

For invested capital - all the formulas i have found have also non-operating cash. Youre formula does not. Is it ok to exclude the non-operating cash? I am asking because I am finding troubles in obtaining them :(

[@retamozotomasdavid381]

Short term borrowing is short therm debt. This is correct??please can you answer me?

[@rzv_sd3720]

@@retamozotomasdavid381 yes

[@retamozotomasdavid381]

@@rzv_sd3720 muchas gracias camarada,saludos desde argentina

[@stockjanitor]

well detailed! love the example!

[@yashshah4307]

Great explanation

[@ptyo3892]

Nice explanation...👍

[@Tony_Toni_Tone]

Better than my teacher

[@soenaing2004]

Great video!

[@Legui1231]

It was useful, thanks

[@katon361]

Thanks!!!!!

[@tytus9618]

Brilliant

[@LearnToCompound]

Great video!

[@yusteven3216]

Very clear, 👌

[@Dociy]

DO we add reserve and surplus while calculating invested capital?