GLOSSARY

Return on capital

IN PLAIN ENGLISH

Profit earned on all the money tied up in a business, from both shareholders and lenders.

WHERE YOU MEET IT

ROIC (annual) and ROCE (annual) in a holding's Growth Analysis section, from the latest annual report.

WATCH OUT FOR

Return on equity can be flattered by borrowing; return on capital is harder to inflate that way.

EXPLAINED IN

What a moat is, and how people argue about it

Educational content only. It is not personal financial advice.