1. Which type of business, a pharmaceutical firm or an electric utility, would benefit more from...

Question

1.  Which type of business, a pharmaceutical firm or an electric utility, would benefit more from improving ROIC than from increasing growth? Why?

Robert · Accepted Answer

Depending on what type of return you’re seeking on an investment you make in your business, there are different 
ways to improve your ROI. Returns can include increased profits, reduced expenses or intangible benefits such as 
improved operating efficiencies or increased brand awareness. Clearly defining your goals and setting as many 
quantifiable benchmarks as possible will help you increase the payback on the different initiatives you take to 
improve your company. 
Define “Return” 
Return is defined as the profit after interest and taxes on investment.  Just as rent is reward for land 
return is reward for capital.  Hence any prudential man will seek to invest in business which bring the 
highest rate of returns with less risks and fluctuations. 
Returns include here increased profits, reduced expenses,

1. Which type of business, a pharmaceutical firm or an electric utility, would benefit more from improving ROIC than from increasing growth? Why?

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