Explain why roic is a better analytical tool

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Reference no: EM13767492

1)-A. Explain why ROIC is a better analytical tool than return on equity (ROE) and return on assets (ROA)

B. Compute ROIC given the following information : EBITDA=$3,000, REVENUES=$5,000, INVESTED CAPTAL=$20,000, OPERATING CASH TAX RATE =25 percent
a) What type of business, a software company or an electric utility , would benefit more from increasing ROIC than from increasing growth? Why?

b) Under what circumstances would changing the capital structure of an electric utility company affect its value.?

c) Why do companies operating within the pharmaceutical and biotechnology companies typically sustain higher ROIC's than firms in the technology , hardware and equipment industries?

Reference no: EM13767492

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