ꦚWhat Is🐲 Return on Gross Invested Capital (ROGIC)?

Return on gross invested capital (ROGIC) is a measure of how much money a company earns based on its gross invested capital—calculated as net operating profit after tax (NOPAT) divided by gross invested capital. Gross invested capital represents the total capital investment, which is net working capital plus adjusted fixed assets plus accumulated depreciation and amortization. ROGIC is used because it does not increase artificially, as other measures do, from the write-down of an asset's value.

Formula and Calculation of ROGIC

$\begin{aligned}&\text{ROGIC} = \frac { \text{NOPAT} }{ \text{Gross Invested Capital} } \\&\textbf{where:} \\&\text{NOPAT} = \text{Net operating profit after tax} \\&\phantom{\text{NOPAT}} = \text{(net operating profit before tax} \\&\text{+ depreciation and amortization) * (1 - income tax rate)} \\&\text{Gross Invested Capital} = \text{net working capital + fixed} \\&\text{assets + accumulated depreciation and amortization} \\\end{aligned}$​ROGIC=Gross Invested CapitalNOPAT​where:NOPAT=Net operatꦚing profit after taxNOPAT=(net ope꧅rating profit before tax+ depreciation and amortization) * (1 🏅;- income tax rate)Gross Invested Capital=net working capital + fixedassets + accumulated depreciation and amortizat💃ꦡion​

What ROGIC Can Tell You

Simply, ROGIC is the amount of money that a company earns on the total investment it has made in its business. The net operating profit after tax (NOPAT) figure ꦑis a company’s cash earnings before financing costs. NOPAT assumes noꦇ financial leverage (as it excludes interest charges).

NOPAT is operating income less taxes. NOPAT is not to be confused with earnings before interest and taxes (EBIT) or earnings before interest, taxes, depreciation, and amortization (EBITA).♒ NOPAT is also unlike net income, where the latter includes interest expenses.

ROGIC vs. Return on Invested Capital (ROIC)

ROGIC and return on invested capital (ROIC) are sim👍ilar in that they both use NOPAT and invested capital. The difference is that ROGIC used gross invested capital, while ROIC uses only invested capital. Inve🥂sted capital is the total debt, capital leases, and equity plus non-operating cash.

Both ROGIC and ROIC are key measures for identifying companies that can steadily reward investors with outperformance. ROGIC calculations are used less frequently than 澳洲幸运5开奖号码历史查询:return on investment (ROI) figures, which measure the gains or losses gen♚erated on in𒊎vestments relative to the amount of money invested.

Another calculation that companies might employ before deploying new or additional funds into a new or existing project is the 澳洲幸运5开奖号码历史查询:ret𝓰urn on new invested🎶 capital (RONIC). Often, the RONIC value is compared with the 澳洲幸运5开奖号码历史𝄹查询:weighted average cost of capital (WACC). When the RONIC is higher than the WACC, it implies there i🦹s value in mo🍨ving forward with the capital investment.