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Glitch with the ROIC

Brian Yu 5 years ago • updated by OSV Support 5 years ago • 1

Okay so for some of the stocks, the ROIC doesn't seem to make sense. I have attached pictures below. Here it isScreen Shot 2019-01-11 at 5.49.20 PM.png

The ROIC will show something like 8% but EBIT would be like 20m and Invested capital would be like 100m (which is supposed to give a 20% ROIC). Correct me if I have something confused. This is for PHM (Pultlegroup). Thanks Jae.

Under review
OSV Support 5 years ago

Hi Brian,

ROIC is actually calculated as Net Operating Profit After Tax (NOPAT) / Invested Capital. NOPAT = EBIT * (1 - Tax Rate). PHM's Tax Rate in the TTM was 39.6%, so multiply that out, and you get the 8.4%.

Hope that helps.

Mike

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