In the world of privately held businesses, success is often measured by growth in revenue, profitability, or market share. While these metrics are important, they don’t always tell the full story of whether a company is truly creating value for its owners. One powerful, yet often underutilized, financial metric that can help answer this question is Return on Invested Capital (ROIC).
ROIC is more than a financial metric; it’s a strategic compass. It measures how effectively a company turns its invested capital into profits. Brian J. Sharkey, Director-in-Charge, Transaction Advisory and Business Valuation, explains why it’s an important indicator of whether a business is truly creating value for its owners.