Performance Measurement

Strategy Driven

Supplementing profits with ROIC and revenue growth is a step in the right direction to ensure that the profits a business earns are actually creating value, not simply over-consuming capital that another company could better deploy.


Death Knell for the Category Killers?

Harvard Business Review

During the current recession, overall consumer spending has declined or held flat, sales per square foot have not improved significantly, and retailers' return on invested capital (ROIC) has suffered dramatically. Best Buy's ROIC has declined from 23.68% to 15.01% percent since 2007, while domestic sales per square foot (including online sales) declined from $909 to $853 during this same period. Internet Retail ROICThis post is part of the HBR Forum, The Future of Retail.

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Even for Companies, the U.S. Is Split Between Haves and Have-Nots

Harvard Business Review

companies’ return on invested capital (ROIC), and compare it with economy-wide ROIC estimates constructed by Deloitte. In 1960, only a tiny proportion of major American firms earned an ROIC of 50% or more.

CEOs Don’t Care Enough About Capital Allocation

Harvard Business Review

The results can be impressive: if your firm’s return on invested capital is 8% and you have an 8% cost of capital, a 1% improvement in ROIC will increase firm value by 19%.

I'm Afraid Bankers Really Do Earn Their Bonuses

Harvard Business Review

Like Return on Invested Capital (ROIC), which reflects what a company earns, how much capital it needs to earn it and the ratio between the two, ROIT reveals what the company earns, how much it has to spend on its talent to earn it, and what the ratio is between the two. Compensation ROIC GSThe debate over the pay of top bankers is highly charged.

Untangling Skill and Luck

Harvard Business Review

Take, for instance, a group of companies that currently have high returns on invested capital (ROIC). If you follow that group over time, you would see their ROICs revert back toward the cost of capital. Research Strategy ROICFor almost two centuries, Spain has hosted an enormously popular Christmas lottery. Based on the payout, it is the biggest lottery in the world and nearly all Spaniards play. In the mid-1970s, a man sought a ticket that ended in 48.