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Technology Stocks : Dell Technologies Inc.

DELL 125.97

-1.0%

3:59 PM EST

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To: Yamakita who wrote (148037)	11/25/1999 11:02:00 PM
From: Chuzzlewit	Read Replies (1) of 176387

Thank you, Yamakita. There are many different ways to calculate an ROIC. It was once called ROAM (return on assets under management). I find that I am unable to duplicate Dell's calculation, and so I prefer my own. It is relatively simple. I take operating earnings (that is, earnings which do not include interest payments or interest income),and divide that by the sum of equity and debt for the previous quarter(both LT and current). I then annualize that number. Another method is to all of the non-cash assets (cash and marketable securities would be excluded) as the numerator. Some analysts exclude intellectual property as well. Regardless of the method you choose you will get only an approximation because there are non-reported earnings (sale of puts) and expenses (issuance of employee stock options) which do not appear on the income statement. The important point is to choose a method of calculation and then consistently stick to it. TTFN, CTC

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