Question

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.

Answer 1

C) Geode's intangible intensity was 6 percent, while NorthWest Tech's was 3 percent.

Step-by-step explanation:

ROIC alslo know as the return on invested capital is the percentage amount of money that a company is making in profit for each percentage point over the Cost of Capital/Weighted Average Cost of Capital (WACC). For her to be able be able to convince the investors , She should us her intangible intensity of 6 percent, against that of Northwest Tench's intangible intensity which is 3 percent.