Breakdown Tables
Return on Capital
The profit each unit of capital in use earns, as a median over the window.
Definition
Each year's profit divided by the average capital in use, and the median of those years. It is a level, so it is defined for every company with statements. It is the same basis as ROIC in the main table, taken as a median so one odd year does not set the number.
Formula
median over up to 10 years of (NOPAT ÷ average invested capital)
Why it matters
A company can only compound as fast as the return on the capital it puts back. Read it with the reinvestment rate beside it: a high rate at a high return is how a company compounds.
How Standard Equity uses it
The median over up to the last ten years the statements have, at least three. General companies use NOPAT and invested capital; REITs use FFO and property, plant and equipment; banks, insurers and companies with a captive finance arm use net income and common book equity (total equity less preferred shares and minority interests). Each Trend bar is one year's return.
The metric
| Category | Breakdown Tables |
|---|---|
| Unit | % |