Which ratio is closest to the "Return On Invested Capital (ROIC)" ratio?
A)Operating Margin
B)Return on Assets (ROA)
C)Return on Capital Employed (ROCE)
D)Net margin

Question

Quizplus · Accepted Answer

ROIC and ROCE are both ratios focused on measuring a company's efficiency in generating profits with the capital it has invested. While operating margin and net margin both provide profitability measures, they do not take into account the company's capital structure. ROA measures the efficiency of the company's assets in generating profits, but does not take into account the capital structure and how capital is financed. Therefore, ROCE is the closest ratio to ROIC as it takes into account both debt and equity capital, while also accounting for operating income.

Which Ratio Is Closest to the "Return on Invested Capital