How and why to calculate Return on Assets (RoA), Return on Invested Capital (ROIC), Return on Capital Employed (ROCE) and Weighted Average Cost of Capital (WACC)
Very clear explanations of these terms which I would readily admit I have not previously fully grasped, particularly WACC. Its interesting, looking at your graph that the ROCE for the two housebuilders (TW & BDEV). One might expect this measure to be similar for these two companies, but it is quite different and you can see here the effect of the large cash pile that BDEV has had on its balance sheet for the past few years. Thank you very much!
Very clear explanations of these terms which I would readily admit I have not previously fully grasped, particularly WACC. Its interesting, looking at your graph that the ROCE for the two housebuilders (TW & BDEV). One might expect this measure to be similar for these two companies, but it is quite different and you can see here the effect of the large cash pile that BDEV has had on its balance sheet for the past few years. Thank you very much!
Glad you found it insightful! There is definitely a lot of nuance with these calculations to dig into, but they can prove quite enlightening