Chapter 4, Problem 7P

Summary Introduction

To determine: Return on equity (ROE) and return on invested capital (ROIC).

Return on Equity: Return on equity represents the amount of return earned by equity share holders; it can be calculated by dividing earnings available for equity share holders to total equity capital.

Return on Invested Capital (ROIC): It represents the amount of return earned by all the investors; it can be calculated by dividing earnings available for investors to total invested capital.