Value in 60 Seconds: Proving ROIC has the largest impact on valuation

We did a bunch of cool reports pointing out how important return on invested capital is. This is the big paradigm report. It's a special report that we put together to prove return on invested capital matters. It comes down mostly to this regression analysis, which shows that 56% of the changes in the variable on the Y-axis are explained by return on invested capital. Well, what's on the Y-axis? The ratio of enterprise value to invested capital. 56% of the changes in that ratio are explained by return on invested capital. One of the things great about this report is that it's got all these additional reports showing why ROE is not useful. If we replace return on invested capital with ROE, you're very far away from even 1%. We've done a ton of great research on this, and the bottom line is return on invested capital is super important.