Question

Tibbs Inc. had the following data for the year ending 12/31/18: Net income = $600; Net operating profit after taxes (NOPAT) = $610; Total assets = $2,500; Short-term investments = $200; Stockholders' equity = $1,800; Total debt = $700; and Total operating capital = $2,500. What was its return on invested capital (ROIC)?

Answer 1

Answer:

The return on invested capital (ROIC) was 24.4%

Explanation:

Return on invested capital is considered a profitability ratio that measures the return that investors earn from their invested capital.

Return on Invested Capital

= Net Operating Profit after Tax/Invested Capital

= Net Operating Profit after Tax/ Total operating capital  

= $610/$2,500

= 24.4%.

Therefore, The return on invested capital (ROIC) was 24.4%