I have been working in a company for seven years. I was very satisfied with my job and salary. But all that changed last couple of month. It seems to me that we have serious crises. I heard our accountants talking about our present situation. They were mentioning return on capital. Can you explain this to me?
Return on capital is being used to measure how well company generates cash flow. Basically that means that this number shows us how efficient company is using money invested in its operations. When the return is bigger than the cost of capital that means that the company is creating value. In other case the vale is destroyed.
