FRReturnOnInvestedCapital (NetProfit, TotalBankDebt, TotalEquity)

Basic and Crystal syntax.

Format

FRReturnOnInvestedCapital(NetProfit, TotalBankDebts, TotalEquity)

Arguments
Action

FRReturnOnInvestedCapital returns the ratio between NetProfit and InvestedCapital (which is TotalBankDebts plus TotalEquity) (for example, ReturnOnInvested Capital = NetProfit / (TotalBankDebts + TotalEquity)).

Typical uses

This ratio is used to measure the return on a company's invested capital, which includes total bank borrowing and the company's total equity. The higher the return the better.

Examples

The following examples are applicable to both Basic and Crystal syntax:

FRReturnOnInvestedCapital(23, 17, 33)

Returns 0.46.

FRReturnOnInvestedCapital(54, 23, 17)

Returns 1.35.

Note:    None of the arguments can be negative; you may have to check for negative values before passing the arguments.

Comment

FRReturnOnInvestedCapital is one of the many financial analysis tools used in interpreting the financial position of a company. As in the case of all ratios, it has to be used with caution. They can just be used as a clue and not solid proof for forming a judgment on the financial status of a company.

Neither one of the ratios can be used alone for doing financial analysis and there are no fixed rules on the results of the ratios. Apart from differences between type of industries, result varies among different companies within the same industry and within different account periods. The results should only be used for relative comparison and trend analysis, rather than treating them as something absolute.



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