There are two Rule #1 Questions of the Week this week. This one's a quick Q&A:
Q: What is the difference if any between ROIC (Return on Investment Capital)
and ROE (Return on Equity)?
A: Return on equity is the net income divided by the equity. ROIC is the net operating income divided by Equity plus long term debt. ROIC is a better number to determine how management is doing because it includes what they borrow as well as the equity.
