I’m trying to calculate the ratio mentioned in Greenblatt, Joel. The Little Book That Still Beats the Market by hands, and quote:
Return on capital was measured by calculating the ratio of pretax operating earnings (EBIT) to tangible capital employed (Net Working Capital + Net Fixed Assets). This ratio was used rather than the more commonly used ratios of return on equity (ROE, earnings/equity) or return on assets (ROA, earnings/assets) for several reasons.
I get NWC value by subtracting the current debts from current assets, but I’m not sure about the Net Fixed Assets. In the 10-K form only NetPPE is related to this term.
Should I use NetPPE directly here?
