If Zephyr Electronics obtains an 18 percent return on invested capital, which of the following will help determine if it has a competitive advantage over other pharmaceutical companies?
A) comparing the return to the return on invested capital obtained by other firms in the industry
B) assessing the value based on the shareholders' expectations of return on their capital
C) evaluating the liquidity ratios for other pharmaceutical companies
D) comparing the value to the history of the firm's return of investment over a number of years

Question

Quizplus · Accepted Answer

Comparing the return to the return on invested capital obtained by other firms in the industry will help determine if Zephyr Electronics has a competitive advantage. Competitive advantage is always relative, not absolute.

If Zephyr Electronics Obtains an 18 Percent Return on Invested