Strategy Driven

JULY 13, 2011

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.

ROIC 62

ROIC Balanced Scorecard Metrics McKinsey 62

Harvard Business Review

FEBRUARY 7, 2011

We will define skill as "the ability to use one's knowledge effectively and readily in execution or performance" and luck as "events or circumstances that operate for or against an individual." Take, for instance, a group of companies that currently have high returns on invested capital (ROIC). The first is to define the terms.

Skills 17

Skills ROIC Sports Cost of Capital 17

Harvard Business Review

APRIL 16, 2015

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%. There are just two ways to increase ROIC: improve operating profit (by increasing revenues or cutting costs) or invest capital more wisely.

CEO 8

CEO ROIC Cost of Capital Merton 8

Harvard Business Review

MAY 24, 2017

A veritable alphabet soup (ROA, RONA, ROIC, ROCE, IRR, MVA, APV, and the like) exists to measure our financial capital. But today’s great CEOs need to be equally great at managing human capital. How can we manage human capital better? Measure it. As the adage goes, you can’t manage what you can’t measure.

Human Capital 15

Human Capital Management Company ROCE 15