CFA® Level I question of the day
14 October 2026 · Corporate Issuers
A company has revenue of 2,000, an operating margin of 10%, a 20% tax rate and average invested capital of 1,000. Its ROIC is closest to:
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Answer: B. 16.0%
NOPAT = 2,000 x 10% x (1 - 0.20) = 160, so ROIC = 160/1,000 = 16%. Equivalently, after-tax margin of 8% times capital turnover of 2.0 gives 16%.
- A. 20.0% - This uses pre-tax operating profit, forgetting to deduct taxes before dividing by capital.
- C. 8.0% - This is the after-tax operating margin alone, omitting capital turnover of 2.0 times.
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