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The Shareholder Forum

Returns on Corporate Capital™

—- comparisons of company returns based on GAAP-defined performance measurements —-


produced according to defined methodology and specifications with data provided by

EDGAR Online, a division of Donnelley Financial Solutions,

from SEC records of each subject company’s audited statements



For news commentary addressing the report below, see


To download a printable copy of this report, click here.

Forum Report: Requested new program and workshop for “metrics”

Defining a Simple Measure of “Returns on Corporate Capital”

Your views will be appreciated to guide the final development of a standard “Returns on Corporate Capital” (“ROCC”) measurement. Initiated a month ago as a subordinate task in our workshop project to define metrics for analyzing stock buybacks,[1] the effort to make it simple proved to be surprisingly complicated.

What we propose is a calculation based purely on GAAP-defined numbers, as reported by companies in their SEC filings:

net income plus interest expense and income taxes,

divided by

the prior year’s ending balance of total assets

 less current liabilities other than short-term debt

To use the workshop test graph online,

click here.


The use of standardized, GAAP-defined terms is important to allow collection of consistent data from all SEC-registered U.S. companies, so that they can be meaningfully compared over time and with each other, and with industry or other groupings of companies. This also allows anyone to obtain the same source data from publicly accessible SEC records, as well as from research services, so that they can independently perform or confirm a ROCC analysis.

This ROCC definition is of course similar to many definitions of “ROIC” (return on invested capital), but avoids both the confusion and debates resulting from all the GAAP and non-GAAP variations of ROIC calculations among research services, analysts and companies that present their own “right” way.[2]

Please use the test version of a ROCC graphing tool, illustrated here and now embedded on a website established for our “metrics” workshop, to review the measurement and consider its applications to whatever analyses you may want to perform. The currently posted online tool is of course designed only for workshop development use, as you’ll see from its slow responses and limited universe of companies. We will be trying to establish specifications for a final public version during the next couple of weeks, so will welcome any advice you can offer to guide our refinement of the graphing tool as well as the ROCC analysis.[3]

These are some of the questions we are currently considering:

1.      Should the calculation of ROCC be further refined?

2.      Should the universe of companies include all SEC-registered U.S. companies, or only a subset such as the Russell 3000 or S&P 1500?

3.      Should calculations of industry comparisons exclude the subject company, as currently specified, or include the subject company in the total?

4.      Should industry classifications be based on the Global Industry Classification Standard (GICS) codes assigned by the Standard & Poor’s staff, which are used by many financial professionals, or on the Standard Industrial Classification (SIC) codes identified by companies themselves in their SEC filings, which are more broadly established?

It will also be very helpful to know how you would like to be able to use ROCC analyses. For example, while our interest in it was stimulated by the need for rational evaluations of stock buyback proposals, some of our workshop participants are primarily interested in applying ROCC analyses to executive compensation policies. We want the analysis, and the tools for its use, to be readily applicable to any kind of corporate performance analysis.

Our objective is to focus on a practical measure of profits generated from using corporate capital in the competitive production of goods and services. That, as the Forum has emphasized, is the only real foundation of corporate value, and of economic prosperity.

GL – June 16, 2016

Gary Lutin

Chairman, The Shareholder Forum

575 Madison Avenue, New York, New York 10022

Tel: 212-605-0335



[3] Special thanks are due to workshop participants Mark Van Clieaf of Organizational Capital Partners and Stephen F. O'Byrne of Shareholder Value Advisors for volunteering their considerable efforts to develop the analytical model for the test graphing tool, and particularly to Mr. O’Byrne for his contribution of the Compustat-derived database on which the test graph operates.




Permission is granted to republish images of the graphs of Returns on Corporate Capital as presented on this website with their full statements of source and copyright information, or as otherwise specifically approved to satisfactorily describe the analysis and sources, and to respect the intellectual property rights of both the Shareholder Forum and its cited contributors of research.

Information requests and suggestions of research applications for Returns on Corporate Capital or variations of the analysis can be addressed to the Shareholder Forum at


The information provided to Forum participants is intended for their private reference, and permission has not been granted for the republishing of any copyrighted material other than as specifically stated. The material presented on this web site is the responsibility of Gary Lutin, as chairman of the Shareholder Forum.

Shareholder Forum™ is a trademark owned by The Shareholder Forum, Inc., for the programs conducted since 1999 to support investor access to decision-making information. It should be noted that we have no responsibility for the services that Broadridge Financial Solutions, Inc., introduced for review in the Forum's 2010 "E-Meetings" program and has since been offering with the “Shareholder Forum” name, and we have asked Broadridge to use a different name that does not suggest our support or endorsement.