If Smith Pharmaceuticals has a 15% return on invested capital (RoIC),what do you need to know to determine if it has a competitive advantage?
A) It must be compared to the RoIC of the competitors and industry.
B) Nothing, 15% is a terrific return for the shareholders.
C) It must be evaluated for depreciation of the capital.
D) It must be compared to the history of the firm's RoIC over a number of years.

Question

Quizplus · Accepted Answer

Competitive advantage is relative to competitors or the industry average, so we must have a basis of comparison for this RoIC performance.

If Smith Pharmaceuticals Has a 15% Return on Invested Capital