Question

Topic: Research/Metrics

Return On Investment Vs Return On Invested Capital

Posted by Anonymous on 6/21/2005 at 10:00 AM ET 50 Points
I'm looking into measuring a project based on ROI and I'm wondering if ROIC is a better tool to measure one project? If not ROIC what other equations are people using - what works best!?

Best Regards,
Jason
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RESPONSES

  • Posted by adammjw on 6/21/2005 at 10:30 AM Member
    Hi,

    Pls note that both kinds of analyses are employed, however it should be noted that quite often ROIC is used for measuring the historical performance of a company, while ROI is more preferably adopted for shorter term evaluation.You might also want to use ROCE-Return on Employed Capital, which evaluates efficiency and profitability of company's capital investments.

    Rgds

    Adam
  • Posted by adammjw on 6/21/2005 at 11:25 AM Accepted
    Jason,

    That's pretty obvious as it's rather short-term.Then I'd use the formula: revenue brought about by the show or if you prefer net income/ capital investment.
    What you, however, have to do is to run after-show metrics of the sales attributable to your show presence with respect to both old and new customers.
    If you want to increase traffic I would use combined method of incentive program i.e. say you got 5,000 people you would like to come to your booth.Then send out 5,000 invitations with a freebie like refridgerator magnet, additionally you could enhance the show appearance by offering 75 or 100 promotional gifts of higher percieved value like desk clock or sth like that to your first guests on the show.Should be effective.
    Does it help you in any way?

    Rgds

    Adam
  • Posted by adammjw on 6/21/2005 at 12:40 PM Member
    Jason,

    Thks for the points and good luck with your show experience.

    Rgds

    Adam
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