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. However, profits, ROIC, and revenue growth are backward looking. They don’t tell you how well the business is positioned for future growth and ROIC improvement. So while profits were rising and ROIC was high, market share was declining.

ROIC 58

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.

Insiders

Sign Up for our Newsletter

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

How Companies Can Use Investors to Their Advantage

Harvard Business

” This feedback helped Oka, an industry outsider, convince President Kazuo Ushida, a 40-year veteran of Nikon’s technology businesses, that the company needed to revisit its dialogue with investors. It would implement targets linked to shareholder value, including ROE and ROIC. Heini Wehrle/BIA/Minden Pictures/Getty Images. Most companies see investor relations as a one-way street.

ROIC 31

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. Economywide ROIC has trended downward since the 1980s, falling from above 6% in the mid-1960s to 5% in 1980, then to 3% in 1990, and to only a bit more than 1% by 2010. Deloitte attributes this fall in part to rising competitive intensity, as a result of new technologies and lower entry barriers.