Posted byDonaldat April 13. 2012
Started reading this book, Valuation: Measuring & Managing the Value of companies, this week primarily to clear my thinking on the importance of Discounted Cash Flow as a Concept, versus the demonstratedfutility of using the DCF tool(predominantly) to determine Value.
However as I give it a careful read, suddenly I have become alive to thinking more clearly about the drivers of value of a business, as also some ways of measuring that!
This Valuation tome by Tom Copeland and Tim Koller is a costly $56 book. However for slightly adventurous ValuePickrs like me, there are very good"Used" alternativesavailable for as low as $5 including shipping. My first experience with "used" books (2010) was so exceptional, that I have always been ordering "Used" when I can. A friend who visits India once/twice a year, drops them by!
I got this very useful book (hardcover) almost new, for just $5! Sometimes on a beginners journey we get put off by the cost involved, so here's a little tip for acquiring wisdom, at low cost!
What drives Value?
The DCF approach is based on the simple concept that an investment adds value if it generates a return on investment greater than that can be earned on investments of similar risk (the opportunity cost of Capital). In other words, for a given level of profits, a company withhigher returns on investmentwill need toinvest less capitalin the business and will, in turn generate higher cash flows and higher value.
We would therefore expect that companies that earn higher returns on capital relative to their cost of capital, to have higher Value. Unfortunately, return on invested capital by itself cannot explain company valuations for the same reason that growth alone does not determine Value.
Other factors matter! Consider two companies starting at the same time with identical expected return on capital over their cost of capital. However one company plans to invest twice as much as the other. As a result, the company withhigher investmentandfaster growthshould have ahigher value, despite identical returns on capital. It becomes clear that bothgrowthandreturn on invested capitalshould drive "Value".
While Buffettdiscourages us from using big spreadsheets (DCF)to calculate a company's value, he surely acknowledges that true determinants of a company's value are the free cash flows it earns.
What valuation metrics do you use?
"The appropriate multiple for a business compared to the S&P 500 depends on its return on equity and return on incremental invested capital. I wouldn't look at a single valuation metric like relative P/E ratio. I don't think price-to-earnings, price-to-book or price-to-sales ratios tell you very much. People want a formula, but it's not that easy. To value something, you simply have to take its free cash flows from now until kingdom come and then discount them back to the present using an appropriate discount rate. All cash is equal.You just need to evaluate a business's economic characteristics."
So if value is based on discounted free cash flow, we should reason that the underlying value drivers of the business must also be drivers of free cash flow.
There are twin drivers of free cash flow; the rate at which the company is growing its revenues, profits, and capital base; and the return on invested capitalover and abovethe cost of capital.
Question of the week
In ValuePickr Portfolio we have several companies doing extremely well over the last year and more like Mayur Uniquoters, Balkrishna Industries, Gujarat Reclaim, Ajanta Pharma, even PI Industries.
1. Can we identify which businesses in ValuePickr Portfolio enjoy superior economic characteristics?
We should be easily able to say, Hey company X is a better quality business than company Y, any day!Separating the wheat from the chaff, again
I am not sure of real value of DCF in real life. My concern is how do you estimate some of the parameters like growth rate, discount rate etc accurately going many years into future. The other issue is small variation in assumed values can cause large change in outcome. Some say you try to get a value range by using the range of values - min and max kind. Not sure of value it offers in real life investing. Would like to learn from experienced investors.
DCF may be useless for fast growing or cyclical or small/mid size companies. But can it be used to get value range for stable companies like Pharma, FMCG, utilities?
Would be interested to know members view on which is more valuable firm from the list given by Donald. I have personally made decent profit in Balkrishna Industries. Very satisfied with that investment. Learned many things from that investment for future.
This seems interesting!
Donald, are you/the authors saying that we can use a nice benchmark like Capital Turnover for differentiating between companies.
Those with sustained high operating margins with high capital turnover are companies that inherently have a better quality business! better economic characteristics, a la the Bufett quote, above.
If this is correct, it adds another dimension to the Capital Allocation discussion, isn't it? Somehow I had never thought of companies this way - which are these companies with high Capital Turnover.
@TCX-
I think we are essentially talking about basic Du Pont's analysis.
High Margin, High Capital Turnover - Great business (eg. Mayur Uniquoters)
Low Margin, High Capital Turnover - Any retail chain (Big Bazaar)
and so on and so forth.
So, high capital turnover only cannot necessarily be used as a benchmark to differentiate between companies.
Hi,
I agree with Kiran that there would beexcellent cos doing great in either parameters. But cos doing great on both cap t/o and margin falls in the very best category - you cannot ask for more
Should we just check past data on this or think about who can sustain higher cap t/o together with higher margins in the forseeable future?
Cheers
Vinod
I wanted to be clear about the economic characteristics of Mayur Uniquoters, and compiled this view! And what a view, no wonder many have their highest allocations to Mayur!!
| Mayur Uniquoter | 2007 | 2008 | 2009 | 2010 | 2011 | 2012E |
| Revenues | 66.26 | 90.24 | 115.05 | 164.73 | 248.56 | 310.70 |
| EBIDT | 6.67 | 10.57 | 11.78 | 27.92 | 40.87 | 49.71 |
| Depreciation | 1.52 | 1.39 | 1.59 | 2.08 | 2.67 | 3.44 |
| EBIT | 5.15 | 9.18 | 10.19 | 25.84 | 38.19 | 46.28 |
| Operating Margin | 7.77% | 10.17% | 8.86% | 15.68% | 15.37% | 14.89% |
| Working Capital | 13.42 | 11.88 | 12.07 | 22.21 | 33.01 | 32.94 |
| Net Fixed Assets | 15.95 | 21.32 | 22.65 | 23.15 | 31.3 | 45.83 |
| Net Other Assets | ||||||
| Invested Capital | 29.37 | 33.20 | 34.72 | 45.36 | 64.31 | 78.76 |
| Capital Turnover | 2.26 | 2.72 | 3.31 | 3.63 | 3.87 | 3.94 |
| EBIT/Invested Capital | 17.53% | 27.65% | 29.36% | 56.96% | 59.39% | 58.75% |
| ROIC | 11.75% | 18.53% | 19.67% | 38.16% | 39.79% | 39.36% |
Interesting to look at the real progress this company has made in both Operating Margins and Capital Turnover.
I have 2 requests:
1. I could not really understand how to compute Net Other Assets (net of noncurrent, non-interest-bearing liabilities). If Ayush, other CAs can explain how to that will be great
2. Can someone do the same exercise for Balkrishna Industries (Pls use the attached file, it will take just 5-10 mins to fill in the data)
Thanks
hey arindam,
thx, I will take this up for Balkrishna and revert. will be good to do for a few other companies too.
cheers
Some Notes on the terms above:
1. Working Capital : We should include all current assets used in or necessary for the operations of the business, including some cash balances, trade accounts receivables, and inventories.
We should specifically exclude excess cash and marketable securities. These generally represent temporary imbalances in the company's cash flow. For example, in Balkrishna Industries Q2 BS, there was some excess 650 Crs+ held in Cash Investments if I remember correctly. The money had just been drawn from ECB for deploying for capex in Q3 and Q4. Usual cash balance for the company is normally 5-10 Crs.
Excess Cash and marketable securities are the short-term cash and investments a company holds over and above its target cash balances to support operations. Target cash balances are usually less than 3% of Sales, depending on the industry.
2. Non-interest bearing current liabilities: These are Accounts Payable and accrued expenses, and other non-interest bearing liabilities; Usually subtracted from Current Assets to calculate net current Assets or Working Capital; so we need not really worry about the workings here
3. Net Other Assets - ??
Ayush and other CAs in the forum. Kindly comment on the above notes. Any other things to be careful about for the calculations. And please elaborate what should we consider for Net other Assets.
Thx
This is turning out to be an wonderful exercise - and I am getting new insights!
Check out BKT economic characteristics! File attached, I changed the order of the years in the file recd - so we can copy data easily from someplace like Moneycontrol!
| Balkrishna Industries | 2012E | 2011 | 2010 | 2009 | 2008 | 2007 |
| Revenues | 2800 | 1997.16 | 1386.74 | 1252.43 | 991.47 | 877.35 |
| EBIDT | 477 | 371.58 | 397.16 | 201.64 | 233.6 | 182.62 |
| Depreciation | 97 | 74.44 | 66.22 | 56.52 | 43.83 | 36 |
| EBIT | 380.00 | 297.14 | 330.94 | 145.12 | 189.77 | 146.62 |
| Operating Margin | 13.57% | 14.88% | 23.86% | 11.59% | 19.14% | 16.71% |
| Working Capital | 772 | 572.75 | 370.61 | 299.14 | 359.94 | 268.75 |
| Net Fixed Assets | 1069 | 687.44 | 614.89 | 534.55 | 424.47 | 399.37 |
| Net Other Assets | ||||||
| Invested Capital | 1841.00 | 1260.19 | 985.50 | 833.69 | 784.41 | 668.12 |
| Capital Turnover | 1.52 | 1.58 | 1.41 | 1.50 | 1.26 | 1.31 |
| EBIT/Invested Capital | 20.64% | 23.58% | 33.58% | 17.41% | 24.19% | 21.95% |
| ROIC | 13.83% | 15.80% | 22.50% | 11.66% | 16.21% | 14.70% |
I took Q2 figures of BS for BKT 2012 data, so removed about 670 Cr of excess cash. is that right?
Hi
Thx evryone for the inputs! nice discussion. I would like to see how Gujarat Reclaim fares in this whole thing...I think its a great company....going by what I have read from Ayush and others.
one question - how do we project for 2012 in this sheet. How to estimate WorkinG capital or fixed Assets,etc.
Re: 2012 projections
I took the BS figures from Q2 results from Balkrishna. Donald had asked to adjust for excess temporary cash so I had done that adjustment to working Capital. You can do the same for Gujarat Reclaim...may be add a 10-15 Cr more on the fixed assets side,etc.
Revenue and EBITDA should be easier. 9 months results are out, we can just extrapolate I think. maybe add a little more on the depreciation side than earlier quarters as there has been big additions to capex.cheers
Firstly, thanks to Donald for initiating this thread and secondly, nudging me to look at this. Didn't get a chance to read it before today.
My two cents worth:-
1) DCF is one method of analysis and by no means the definitive method. As I think Girish has mentioned, the number of parameters out there are too large to reduce/eliminate assumption errors.
2) Return on capital - instead of splitting hairs on difficult formulae, I think it is important to understand that at the end of the day, return is net profit or net cashflow divided by either total shareholders equity (if you are looking for equity capital returns) or toal capital employed (if you are looking for overall returns including debt taken). All other return calculations, to my mind, are academic. The reason is taxes and depreciation are as much a part of individual businesses as their operating characteristics.
For net equity returns: Net Profit / Networth
For total returns: Net Profit / All assets
3) Business are primarily of 2 types - I call them the "Fine Italian restaurant" and the "local Chinese". Italian restaurants have a high margin, low turnover business andChineseones typically (except places like mainland china) are low margin, high turnover businesses. Neither is a preferable model as there can be great businesses in both categories. The problem arises when management confuse one for the other or try to be everything to everyone (you cannot sell Nano and Jaguar from the same showroom or make them in the same factory, that is why Toyota has a premium brand like Lexus completely separate).
4) Valuation to me is not a numbers game. I need to have a good "feel" about the company, its ability to scale in the future, market position, market share, the way the management answers questions in analyst calls and other such intangibles which are not directly available in the numbers.
5) Dupont analysis tells us how the RoE is being achieved. And is a good tool for understanding the various levers the business has.
Also, if you could all add your inferences that you are drawing from the data tables that you are putting up here, it would help the others.
| Gujarat Reclaim | 2012E | 2011 | 2010 | 2009 | 2008 | 2007 |
| Revenues | 250 | 187.35 | 144.82 | 132.19 | 110.74 | 86.49 |
| EBIDT | 56 | 33.18 | 27.57 | 26.54 | 19.01 | 19.31 |
| Depreciation | 7 | 5.11 | 4.35 | 3.96 | 3.45 | 2.42 |
| EBIT | 49.00 | 28.07 | 23.22 | 22.58 | 15.56 | 16.89 |
| Operating Margin | 19.60% | 14.98% | 16.03% | 17.08% | 14.05% | 19.53% |
| Working Capital | 50 | 26.96 | 21.28 | 16.86 | 16.41 | 9.87 |
| Net Fixed Assets | 100 | 68.72 | 48.56 | 38.09 | 37.21 | 32.55 |
| Net Other Assets | ||||||
| Invested Capital | 150.00 | 95.68 | 69.84 | 54.95 | 53.62 | 42.42 |
| Capital Turnover | 1.67 | 1.96 | 2.07 | 2.41 | 2.07 | 2.04 |
| EBIT/Invested Capital | 32.67% | 29.34% | 33.25% | 41.09% | 29.02% | 39.82% |
| ROIC | 21.89% | 19.66% | 22.28% | 27.53% | 19.44% | 26.68% |
Hi Abhishek,
Thanks for writing at length, and wonderful insights!
You are right, we get more a "feel" for the company from how the Management answers queries and the insights we receive from studies on the size of the opportunity, ability of the company to scale up, fund itself, etc. Ratios/Numbers become less important, once you have seen the basics are good.
I think the point Donald and others are trying to work at here is - In the normal way of doing things, we are really not clear which business has thebest economic characteristicsin Warren Buffets words. We do not have the mental models ready to think about businesses clearly in those terms.
If we look at the valuable data that is being thrown up by members, there is a wealth of additional insights - just form a few simple numbers - about the quality of these excellent businesses - apart from what we already know about the Management, opportunity size, etc. Actually the data tells us much about the scalability of the business too!
Assume all of these businesses are available ~7x 2013E earnings. Where will I put in my money - given all of these are some of our prized companies - all have done pretty well too -I think these numbers are a great way to start thinking more clearly on how much Capital to allocate- in addition to the other not-so-objective ways of determining Business Quality.
Invite your views.
Thanks all for useful data and good discussion that is happening here.
Should we also include freecash-flowin the companyfinancialspreadshit? Free cash flow as percentage of sales is useful indicator of company's earning prowess.
Hi Arindam,
Very interesting points. Let me try and add my thouhgts more to clarify my muddled thought process though penning it down.
"...not clear which business has the best economic characteristics" - how do you define what is the best economic characteristics, that I think is the question... Is it return ratios, asset turnover, margins, market share etc? Or does it inlcude possible market size and market share in the, say, next 10 years? If yes, then how do you measure that?
"....data that is being thrown up by members...about the quality of these excellent businesses..." - So, let us look at the numbers from one of these companies, say Mayur. (Let me pick Mayur as I have it has the highest capital investment and the second highest weigtage in my portfolio).
What does it tell us? That it has increased sales about 6 times over the last 5 yrs. Margins have doubled but has been in the same range for the last 3 years, not enough to conclusively prove that it has moved into a higher margin business or if its a cyclical upturn. ROIC has again gone up significantly in the last 3 years, but not enough to be sure if its a secular upmove or cyclical one.
All this tells you what happened over the last 5 years, with no real indication of how it happened and most importantly why it happened. The numbers tell you that it might end 2012 with a revenue of 300 odd crores. How do I know whether revenues can go up to 3,000 cr or 30,000 cr in the future? Can someone me what the net margins are likely to be in 2020? Will they be 15% as it has been for the last 3 years or will it be 8% like the 3 yrs previous to that, or any other number for that matter. I rest my case on this point.
"Assume all of these businesses are available ~7x 2013E earnings. Where will I put in my money - I think these numbers are a great way to start thinking more clearly on how much capital to allocate" - Great question. What I would do if I got say Mayur, BKT & Guj Reclaim all at the same valuation is I would have a 50:30:20 spread amongst them. The logic has nothing to do with numbers here but everything to do with "feel" and circle of competence and understanding of business risk. Mayur has a much higher potential market size and not too may competitors. Management seems sensible. Company is growing. BKT has a niche market which is difficult to replicate easily. Gujarat Reclaim is also a niche business but scalability is somewhat limited to my mind. It cannot increase its sales 10 times in the next 10 years even if it tried to. However, stock prices have a nasty way of misbehaving and making us look like fools. So, you might see Guj Rclm doing the best in the next few years!
Aonther way I have learnt to think (borrowed from Charlie Munger from his Art of Stock Picking) is if I have to start a business and have access to unlimited capital, what business would it be? And if I have to harm any business what could I do? Again, taking an example, would I buy Mayur as a whole company today (assuming they are willing to sell and I have unlimited capital)? If yes, why? If no, why not? Also, if I have to start a competitor for Mayur, what would I need to hurt Mayur? Can I take it out of business?
Net net, my thought process is more based on critical thinking and subjective analysis aided by core fundamentals, rather than the fundamentals itself.
P.S 1 : I take all published numbers with a pinch of salt. I am not sure if all the numbers that are published are 100% accurate. Not saying management is not 100% honest in all cases (which is certainly true in most cases). But other than actual cash numbers most are back calculated to a certain degree. So, use the numbers as a guide and not a roadmap.
P.S 2: Girish, free cashflow is an approximation in most financial statements as it is not directly reported. But to my mind it is one of the most important numbers that we should look at. Cash is king, you cannot dispute with it , unless of course you are holding Satyamshares
Whew!! That ends my lengthy discourse, and now back into hibernation!!!
Thanks Abhishek,
Very valuable directions. Much of this will allow me to think more clearly. I agree with your philosophy of 50:30:20 roughly between Mayur:BKT: Guj Reclaim - for the reasons you mention.
I have 2 things to point out in the data interpretation.
1. Economic Characteristics - At the simplest level, by this Buffet perhaps meant - does this business inherently have superior economic characteristics - Will my Invested Capital earn more returns for me in this business than say business x - more likely to, because it is incredibly more capital efficient. Not the whole sizing up size and prospects 20 years down the line ...which is a much bigger exercise, no doubt
2. You were looking more at trends of last 3 years. more or less at the same level is the verdict.But If I look at just Capital Turnover - this is a truly 'classy" aspect of the business for Mayur. This has been a steady upclimb to almost 4x. They can put less capital in the business and take out more Sales -every year.
3. This is what amazes me - and sets Mayur apart from any other business we are looking at currently. It is a better business to put my money in -compared to others - as long as it is also growing decently in comparison to others.
4. Free Cash flows - Mayur has a phenomenal record there - and this is ultimately linked to Capital Turnover, I guess. The more capital efficient you are, the less you will need to put in the business ( Working Capital and Capex).
Great discussion going on..
There is no doubt that numbers alone cannot give you the full picture. However the numbers do help in building the conviction that we need. Based on our expectations for increasing market and increasing market share, increasing eficiencies or high expectations of growth, can we see evidence of that through the numbers?
Past track record of growth in revenues implies growing market (either gain in market share or increasing market size).
Past track record ofhigher margins and increasing capital turnover implieshigher efficiency.
Whether sustainable or not is a story which is going to unfold, but as investors we tend to underestimate the capacity of a trend to hold. What goes up can come down, but it can continue to go higher before it comes down. ( here I am not referring to stock price, but performance numbers that we discuss.) The margin expansion could continue due to higher efficiency or stay at a higher level. It is not necessary that it should revert back to average in a hurry.
I would like to also re-emphasize a line from Donald's post earlier..
"There are twin drivers of free cash flow; the rate at which the company is growing its revenues, profits, and capital base; and the return on invested capitalover and abovethe cost of capital."
In the previous posts we seemed to focus on ROIC.. we also need to see the Cost of Capital. Here the factors to look at are the level of debt and at what cost and of course the PE ratio.
Let us look at the investment criteria that Warren Buffet uses (as provided in The Warren Buffet Way by Robert Hagstorm).
Business Tenets
1. Is the business simple and understandable?
2. Does the business have a consistent operating history?
3. Does the business have favorable long-term prospects?
Management Tenets
4. Is management rational?
5. Is management candid with its shareholders?
6. Does management resist the institutional imperative?
Financial Tenets
7. What is the return on equity?
8. What are the companyâs âowner earningsâ?
9. What are the profit margins?
10. Has the company created at least one dollar of marketvalue for every dollar retained?
Value Tenets
11. What is the value of the company?
12. Can it be purchased at a significant discount to its value?
Now the classification is very important. People tend to focus on some or all the headings. Some people (like me) try to focus more on Business part, some focus more on financial part and so on. I think one of the reason Buffet is so immensely successful is because he focuses on all. Incidentally, only 4 out of the 12 tenets relate to
I am not saying that numbers are not important. Not in the least. Numbers are very important. What I am trying to say is that numbers are a starting point of the analysis, and not the ending point. Trends that are thrown by the numbers are important to interpret, and more critical is to understand the reason why things have been the way it has. So, if margins have gone up, why has it gone up? What has the management said about it on record? Is it repeatable? Asking the second & third order questions are more important, rather than just looking at the numbers and trying to picture a story.
Let me share a personal experience of why I am saying all this. The first stock I bought in my life was HLL in 1999. If you looked at the numbers at that time, it was excellent. ROE of more than 100%, good margins, great dividend paying record etc etc. What happened then? The business slumped and for the next 10 years HLL (then became HUL) was struggling to maintain margins and profitability. Stock markets are replete with such histories. IBM till 1992, Xerox, Kodak all had great numbers and then went into a huge tailspin downwards. So, to me the lesson learnt from all these are that past numbers are exactly that - "past". Use it to look at what the future can hold. But don't bet your house based on past numbers.
Hi,
Nice to see much discussion and interaction on the above.
Some company specific data helped us focus on what creates value too -higher Operating Margin and/or higher Capital Turnover leading to higher Return on Invested Capital.
Numbers can never tell the whole story, yes. In ValuePickr's journey of last 2 years, Numbers have been very important though - they have led us to a more promising set of stocks - impressive past performance led us to question - if these can be sustainable?? The subsequent homework, Management Q&As, etc helped us form Conviction about sustainability.
Pros, senior investors, and novices read different things from the same set of data, right? Even when we understand the different stories (as much as is possible), we still end up making different investment allocations, isn't it?
Does it make more sense to allocate more capital to the most efficient business in my portfolio as long as it matches up in growth and sustainability. What would I do if I were the owner of these businesses?
We don't always think in these lines. The above discussion certainly has helped me think more concretely about these issues.
Thank You! and keep participating!
Hi,
Thanks for the nice discussion. I have some doubts, can someone plz point me where I should look/ help me understand.
Can we say operating cash flow = revenue?
When we compute free cash flow = should the dividends be reduced?
Thanks in advance
Question of the week
In ValuePickr Portfolio we have several companies doing extremely well like Mayur Uniquoters, Balkrishna Industries, Gujarat Reclaim, Ajanta Pharma, even PI Industries.
1. Can we identify which businesses in ValuePickr Portfolio have created higher Economic Profit in the last 5 years, in proportion to the Invested Capital 5 years back
Are there businesess that have realised more than their Invested Capital in Economic Profits, over the last 5 years!Separating the wheat from the chaff, again
You can refer toInvestopediafor an education on basic jargons like free cash flow. Even ValuePickr has an excellent compilation in theBasicssection.
Previously Raju M wrote:
Hi,
Thanks for the nice discussion. I have some doubts, can someone plz point me where I should look/ help me understand.
Can we say operating cash flow = revenue?When we compute free cash flow = should the dividends be reduced?
Thanks in advance
Nice discussion. Due consideration should also be given to topics like extractable free cash flow i.e. free cash flow that can be taken out of the business. Intel for eg. has to spend a lot of money on R&D just to remain competitive and cannot return much of its earnings to shareholders.
You do not want you company to pay dividends at the expense of maintaining its competitive advantage.
Lastly, hindsight is 20-20. But looking ahead is where the real challenges lie. Consider Nokia which was a pretty successful company in 2001, but look at it now. This is in stark contrast with Apple. So understanding the drivers of high ROIC and high profit margins are important and identifying companies that are going to show a substantial change in ROIC is also important which is a result of understanding industry dynamics.
| Mayur Uniquoter | 2012E | 2011 | 2010 | 2009 | 2008 | 2007 |
| Revenues | 310.70 | 248.56 | 164.73 | 115.05 | 90.24 | 66.26 |
| EBIDT | 49.71 | 40.87 | 27.92 | 11.78 | 10.57 | 6.67 |
| Depreciation | 3.44 | 2.67 | 2.08 | 1.59 | 1.39 | 1.52 |
| EBIT | 46.28 | 38.19 | 25.84 | 10.19 | 9.18 | 5.15 |
| Operating Margin | 14.89% | 15.37% | 15.68% | 8.86% | 10.17% | 7.77% |
| Working Capital | 32.94 | 33.01 | 22.21 | 12.07 | 11.88 | 13.42 |
| Net Fixed Assets | 45.83 | 31.3 | 23.15 | 22.65 | 21.32 | 15.95 |
| Net Other Assets | ||||||
| Invested Capital | 78.76 | 64.31 | 45.36 | 34.72 | 33.20 | 29.37 |
| Capital Turnover | 3.94 | 3.87 | 3.63 | 3.31 | 2.72 | 2.26 |
| EBIT/Invested Capital | 58.75% | 59.39% | 56.96% | 29.36% | 27.65% | 17.53% |
| ROIC | 39.36% | 39.79% | 38.16% | 19.67% | 18.53% | 11.75% |
| Economic Profit | 21.55 | 17.87 | 11.87 | 2.66 | 2.17 | -0.07 |
| Cumulative EP | 56.05 | 34.50 | 16.62 | 4.76 | 2.09 | -0.07 |
| 5 yr EP/Invested Cap | 117.46% |
