An interesting question.
Here is an interesting question for the readers...
Investors regard Return on capital employed(ROCE) or Return on capital invested (ROIC) an important metric to gauge business quality.
Right?
In fact , Joel Greenblatt also uses this in his magic formula.
The question is :
Can a negative ROCE/ROIC be a good thing ?
if yes , how ?
And although there are many ways to calculate ROCE/ROIC
for this question we would stick to : EBIT / Invested capital
where invested capital is : net fixed assets + net working capital
The answer is very simple but only if you have really grasped the concept.
Please email me your answer at narang.gp(at)gmail.com
I will post the best email on this blog.
Next week.
