If a firm has 25% return on invested capital (RoIC) what do you need to know to determine if it has a competitive advantage?
It must be compared to the RoIC of the competitors and/or industry.
Nothing, 25% is a terrific return for the shareholders.
It must be evaluated for depreciation of the capital.
It must be compared to the history of the firm’s RoIC over a number of years.
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