Generally speaking, a firm will create value if its return on invested capital (ROIC) is less than the cost of capital.

Question

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As a rule of thumb, if a firm's ROIC is greater than its cost of capital, it generates value; if it is less than the cost of capital, the firm destroys value. The cost of capital represents a firm's cost of financing operations from both equity through issuing stock and debt through issuing bonds.

Generally Speaking, a Firm Will Create Value If Its Return