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Questions and Answers
What does the Reinvestment Rate measure?
What does the Reinvestment Rate measure?
- Percentage of net income allocated to CapEx and NWC
- Percentage of total revenue allocated to CapEx and NWC
- Percentage of EBITDA allocated to CapEx and NWC
- Percentage of after-tax operating income allocated to CapEx and NWC (correct)
What is the calculation for net CapEx?
What is the calculation for net CapEx?
- Capital expenditures + Depreciation
- Capital expenditures / Depreciation
- Capital expenditures * Depreciation
- Capital expenditures - Depreciation (correct)
What is the formula for Return on Invested Capital (ROIC)?
What is the formula for Return on Invested Capital (ROIC)?
- $ROIC = \frac{NOPAT}{Total\,Invested\,Capital}$ (correct)
- $ROIC = \frac{EBIT}{Total\,Invested\,Capital}$
- $ROIC = \frac{EBITDA}{Total\,Invested\,Capital}$
- $ROIC = \frac{Net\,Income}{Total\,Invested\,Capital}$
What does the expected growth rate in operating income depend on?
What does the expected growth rate in operating income depend on?
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What is the three-step process for calculating the reinvestment rate?
What is the three-step process for calculating the reinvestment rate?
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