Elena is the CEO of Geode Technologies, a consumer electronics manufacturer. Last year, Geode's return on invested capital (ROIC) was 11.6 percent, while Geode's closest competitor, NorthWest Tech, had an ROIC of 17 percent. Which of the following factors might Elena use to convince investors to invest in Geode rather than NorthWest Tech?
A) Geode had a Research & development (R&D) expense / Revenue ratio of 16 percent, while NorthWest Tech had an R&D / Revenue ratio of 12 percent.
B) Geode's working capital to revenue ratio was 75 percent, while NorthWest Tech's was 68 percent.
C) Geode's intangible intensity was 6 percent, while NorthWest Tech's was 3 percent.
D) Geode's plant, property, and equipment (PPE) over revenue ratio was 19 percent, while NorthWest Tech's was 10 percent.

Question

Quizplus · Accepted Answer

Geode's higher Intangible intensity, or Intangibles / Revenue ratio, suggests that the company has more valuable intangible assets than NorthWest Tech. Intangible assets include a firm's intellectual property (such as patents, copyrights, and trademarks), goodwill, and brand value. A firm with significant intangible assets may be attractive to investors for its potential to generate higher returns in the future.

Elena Is the CEO of Geode Technologies, a Consumer Electronics