Consider the following two companies (they operate in the same region with taxes equal to 30%): Company A: Sells goods for $3.1 per unit at costs of $1.9 to achieve a total revenue of $5,425 a year. It currently has invested capital of $20,000. Company B: Sells goods for $2.8 per unit at costs of $2.1. For its operations, the company invested capital of $6.2 per unit. Which company has the higher ROIC? Where does the advantage come from?

Answer rating: 100% (QA)

To calculate the Return on Invested Capital ROIC for each company well use the following formula Net ... View the full answer