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Updated

Economic profits (ROIC-WACC)

6 480
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.







Release Notes
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.

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