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Economic profits (ROIC-WACC)

5 938
Fundamental Chart
quantifying a competitive advantage

Economic profits (EP) measures the spread between
a firms return on invested capital and weighted average cost of capital.
Companies that have a positive EP means that the firm generates a higher
return then it cost to raise the capital required for investment.
a company that can maintain a an positive excess EP will see its value
increase as growth increases and vice versa.


EP can be used as a quantitative measure, indicating a durable competitive advantage.
best used as a comparable metric within an industry group.

As in most case when analyzing historic fundamentals, consistency is paramount.
as well as future expectations.

notes on code:
- average TTM ROIC TTM
- Coast of equity uses CAPM
- 6% required rate of return (option to change as desired)
- Value of equity, market value
- Value of debt, book value (due to limitations)
- risk free rate, US10Y


1st published scrip, let me know what you think in the comments.







Sürüm Notları
Fundamental Chart
quantifying a competitive advantage

Economic profits (EP) measures the spread between
a firms return on invested capital and weighted average cost of capital.
Companies that have a positive EP means that the firm generates a higher
return then it cost to raise the capital required for investment.
a company that can maintain a an positive excess EP will see its value
increase as growth increases and vice versa.


EP can be used as a quantitative measure, indicating a durable competitive advantage.
best used as a comparable metric within an industry group.

As in most case when analyzing historic fundamentals, consistency is paramount.
as well as future expectations.

notes on code:
- average TTM ROIC TTM
- Coast of equity uses CAPM
- 6% required rate of return (option to change as desired)
- Value of equity, market value
- Value of debt, book value (due to limitations)
- risk free rate, US10Y


1st published scrip, let me know what you think in the comments.

Feragatname

Bilgiler ve yayınlar, TradingView tarafından sağlanan veya onaylanan finansal, yatırım, işlem veya diğer türden tavsiye veya tavsiyeler anlamına gelmez ve teşkil etmez. Kullanım Şartları'nda daha fazlasını okuyun.