Evaluate the steps that Nike takes in the above calculation and explain how this ROIC measure compares to traditional ratios like ROE and ROA. What are the similarities and what are the differences? Why do you think Nike presents the "return on invested capital" in this way?

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1. [Ratio analysis] For the year that ended in May 2022, Nike presented the "return on invested capital" (ROIC) as a "non-GAAP" performance measure in its annual report: (Dollars in millions) Numerator Net income Add: Interest expense (income), net Add: Income tax expense Earnings before interest and taxes Income tax adjustment() Earnings before interest and after taxes FOR THE TRAILING FOUR QUARTERS ENDED MAY 31, 2023 MAY 31, 2022 $ 5,070 $ 6,046 (6) 205 1,131 605 6,195 6,856 (1,130) (624) 6,232 $ 5,065 $ AVERAGE FOR THE TRAILING FIVE QUARTERS ENDED MAY 31, 2023 MAY 31, 2022 Denominator Total debt (2) $ 12,491 $ 12,722 Add: Shareholders' equity 14,982 14,425 Less: Cash and equivalents and Short-term investments 11,394 13,748 Total invested capital $ 16,079 $ 13,399 1. [Ratio analysis] For the year that ended in May 2022, Nike presented the "return on invested capital" (ROIC) as a "non-GAAP" performance measure in its annual report: (Dollars in millions) Numerator Net income Add: Interest expense (income), net Add: Income tax expense Earnings before interest and taxes Income tax adjustment() Earnings before interest and after taxes FOR THE TRAILING FOUR QUARTERS ENDED MAY 31, 2023 MAY 31, 2022 $ 5,070 $ 6,046 (6) 205 1,131 605 6,195 6,856 (1,130) (624) 6,232 $ 5,065 $ AVERAGE FOR THE TRAILING FIVE QUARTERS ENDED MAY 31, 2023 MAY 31, 2022 Denominator Total debt (2) $ 12,491 $ 12,722 Add: Shareholders' equity 14,982 14,425 Less: Cash and equivalents and Short-term investments 11,394 13,748 Total invested capital $ 16,079 $ 13,399