How will an increase in invested capital (IC) in a given year (e.g., Year 1) affect...

 

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How will an increase in invested capital (IC) in a given year (e.g., Year 1) affect free cash flow (FCF) and ROIC in that year (e.g., Year 1) if all other things are kept equal (e.g.. Year 1 NOPLAT)? Assume we use the AVERAGE invested capital (e.g., (Year 0 IC+Year 1 IC)/2) to calculate ROIC. How will an increase in invested capital (IC) in a given year (e.g., Year 1) affect free cash flow (FCF) and ROIC in that year (e.g., Year 1) if all other things are kept equal (e.g.. Year 1 NOPLAT)? Assume we use the AVERAGE invested capital (e.g., (Year 0 IC+Year 1 IC)/2) to calculate ROIC.

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An increase in invested capital IC in a given year while keeping all other things equal will have th... View the full answer