Parks Inc. had the following data for the year ending 12/31/2x: Net income = $300; Net...

Parks Inc. had the following data for the year ending 12/31/2x: Net income = $300; Net operating profit after taxes (NOPAT) = $400; Total assets = $2,500; Short-term investments = $200; Shareholders’ equity = $1,800; NOWC = $1200; Operating long-term assets $1,100. What was its return on invested capital (ROIC)?

Expert Solution

Return on invested capital = Net operating profit after tax (NOPAT) / Total operating capital (Via Operating Approach)

NOPAT = $400

Total operating capital (Via Operating Approach) = Net Operating Working Capital + Non-current Operating Assets

= $1200 + $1,100 = $2300

Return on invested capital (ROIC) = $400 / 2300 = 0.1739 = 17.39%

jeff jeffy answered 2 years ago

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