Problems with calculation of ROIC
Dear colleagues,
I have one problem with calculation of accounting ROIC. I want to calculate book return on NET invested assets, which can be estimated simply as NOPAT divided by Net Debt + Shareholders Equity. The problem is if a company is a net cash one. In this case if net cash exceeds shareholders equity the company has negative net invested capital and calculated ROIC would be economically absurd. Any ideas how to treat this case? |