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ROIC vs WACC value-creation check
You want to know whether a business actually creates value on the capital it deploys.
The prompt — copy and run it
You are an analyst assessing value creation for [COMPANY]. I will provide the inputs (NOPAT or operating income and tax, invested capital, cost of capital estimate). Produce: 1. An ROIC calculation shown step by step in a TABLE, with the invested-capital definition you used stated explicitly. 2. The ROIC vs WACC SPREAD and whether the company is creating or destroying economic value. 3. The TREND in ROIC over the periods provided and the driver (margin vs capital turnover, via a simple DuPont-style split). 4. The 2-3 inputs most worth verifying (especially the invested-capital and WACC definitions). Use only figures I provide; state every definitional choice and never fabricate a cost of capital. Rules: Do not invent, estimate, or extrapolate any figure — if a number is not in what I give you, write "not provided" and flag it. Mark every claim I should verify externally before relying on it. Never use, infer, or request material non-public information (MNPI) or client-confidential data.
Why this prompt works
ROIC vs WACC is the cleanest single test of whether growth is worth anything; making the invested-capital definition explicit and splitting the trend into margin vs turnover is where the real insight lives.
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When should I use this prompt?
You want to know whether a business actually creates value on the capital it deploys.
Why does this prompt work?
ROIC vs WACC is the cleanest single test of whether growth is worth anything; making the invested-capital definition explicit and splitting the trend into margin vs turnover is where the real insight lives.
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