Which one do you guys prefer? ROIC or ROE?
I personally like ROE better. I look at it along side other items on the balanced sheet, like D/E, excess cash, intangibles, goodwill etc. the trend also shows how well the company reinvest incremental retained earnings (if incremental return is poor, it naturally pushes ROE down over time)
ROIC just never seems intuitive to me. It’s kinda like ROA, but using the liability and equity side? What if the company has a ton of right to use asset and associated liability? There doesn’t seem to be a standardized way of classifying invested capital.
Welcome any thoughts. I saw a lot of mentioning of ROIC in the forum. How do you use it? What additional insights can you gain using this metric, compared to other metrics like ROE, D/E, ROA?