Return On New Invested Capital (RONIC)

Return On New Invested Capital (RONIC) is a figure used to determine the amount of return that a firm could earn on additional contributed capital.

Return On New Invested Capital (RONIC)

Return On New Invested Capital (RONIC) is a figure used to determine the amount of return that a firm could earn on additional contributed capital.


Return On New Invested Capital Interpretation

Return On New Invested Capital (RONIC) is a calculation used, either by a firm or investors, to determine the amount of return that a firm could earn on additional contributed capital. The calculation measures the return generated when a company converts its capital into capital expenditures, which generate revenues from core operations. A higher RONIC equates to a relatively efficient firm.



Profit growth can be calculated by multiplying the Reinvestment Rate (%) by the Rate of Return (RR).  The RR is equivalent to RONIC.


Profit Growth is calculated by multiplying the re-investment rate by Return on New Invested Capital (RONIC)
 

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