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RETURN ON INVESTED CAPITAL IS WHAT MATTERS WHEN INVESTING IN THE STOCK MARKET (ROIC)

By Sven Carlin. Originally published at ValueWalk.

Charlie Munger is famous for saying that return on invested capital (ROIC) is the most important metric to look at when investing and that long term returns are not going to significantly differ from the ROIC a company achieves over the long term. In the video I discuss how to calculate ROIC, albeit much more conservatively than what would be the usual academic way. The more conservative you are with the input factors, the higher will be the margin of safety when investing.


I quickly discuss the metric on two examples; Apple (NASDAQ: AAPL) and Souther Company (NYSE: SO). The conclusion is about how should one go about applying the ROIC metric when looking for long term investments.


If you are not using the ROIC tool, this will be a very valuable video and one that will add extreme value to your investing life cycle. If you are using the ROIC, the discussed way of going about it will increase your margin of safety when investing.


Enjoy the video and I wish you low risk high reward investing!


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The post RETURN ON INVESTED CAPITAL IS WHAT MATTERS WHEN INVESTING IN THE STOCK MARKET (ROIC) appeared first on ValueWalk.

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