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Let's assume that a firm's return on invested capital (ROIC) can be raised by 1%, say, by an improvement in efficiency or by lowering the
Let's assume that a firm's return on invested capital (ROIC) can be raised by 1%, say, by an improvement in efficiency or by lowering the cost of goods sold. Given this 1% increase in ROIC, when a firm's "starting" return on capital is low, it will show a bigger percentage growth in net income or EPS than would be seen if the firm's "starting" return on capital is high.
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