In early years,for a given company with a positive profit,ROIC with capitalized R&D will be higher than that with expensed R&D.

Question

Quizplus · Accepted Answer

Capitalized R&D adds to the company's asset base, which can improve the ROIC calculation by spreading the cost over a longer period of time. Expensed R&D, on the other hand, reduces the company's current earnings, which can reduce the ROIC calculation. Therefore, for a given company with a positive profit, ROIC with capitalized R&D will be higher than that with expensed R&D.

In Early Years,for a Given Company with a Positive Profit,ROIC