NOPAT Margin & Invested Capital Turnover | Voters

NOPAT Margin & Invested Capital Turnover

under review

Outer Cat

Michael Mauboussin has this famous scatter plot of NOPAT Margin vs. Invested Capital Turnover.

It would be nice to either be allowed to use custom formulas in the scattor OR have those two metrics already in the available ratios.

April 19, 2024

Conor MacNeil

updated the status to

under review

Conor MacNeil

updated the status to

open

Conor MacNeil

updated the status to

under review

Conor MacNeil

Hey Joren, I think this is doable. For custom formulas, we eventually want to allow those in screeners, charts, and other areas, but thats a seperate, larger, project. 
For NOPAT margin and Invested Capital Turnover, we could add these as available ratios. We already calculate NOPAT, so that's fine. 
For Invested Capital Turnover, would you expect this to be turnover per single year or use average invested capital (the average of last two years) in the formula?
Also, if you had a link to the paper that MM discusses this, that would be great.

Outer Cat

Conor MacNeil https://www.morganstanley.com/im/publication/insights/articles/article_returnoninvestedcapital.pdf 
page 24 & 25
I think FY Invested Capital should work just fine. However the Invested Capital formula has both so idk how difficult it would be to implement both in the final invested capital turnover formula. Up to you.
Thanks for the effort!