In this case study, we want to calculate the return ratios for the four companies across the top, starting with Coca-Cola. So let's start with that return on equity. That's going to be net income divided by equity. So I'm gonna press equals, scroll up to the income statements, and I find their reported net income. I divide that by, scroll back down to the bottom of the balance sheets, their shareholders' equity. Now we need to calculate EBIT after tax, which is EBIAT or NOPAT. So all the way up to the top, find their EBIT, and then I need to multiply that by one minus the tax rate. Now that's a little bit further down in the income statements, and there it is. Next we need invested capital. So that's going to be debt plus equity minus any cash or long-term cash. So we've got that at the bottom of our balance sheet. We've got the net debt plus the shareholders' equity. Now I've got everything I need to calculate return on invested capital or ROIC. I take that EBIAT, divide it by the invested capital, and we get a figure. Lastly then the dividend payout. So I need my dividend figure, which is at the bottom of the income statement, and I divide that by net income. Let's copy that to the right, and now I can copy and paste that into all of the other companies' columns, there we go.

So let's have a look at Coca-Cola and let's compare it to Keurig Dr. Pepper. Return on equity for Coca-Cola, fantastically high. Keurig Dr. Pepper, much lower. This is partly because Keurig Dr. Pepper recently had done an equity issuance. That equity issuance is at modern day prices, which pushes their equity up and unfortunately pushes their return on equity down. ROIC, again for Coca-Cola, a much higher number. Their invested capital compared to their returns is a much lower figure. The dividend payout ratio, interesting for both of these, very high numbers around the 76 and 90% for Coca-Cola. A little bit lower for Keurig Dr. Pepper. Let's compare across to National Beverage. National Beverage in year 20 decided to cancel their dividend. They were feeling prudent, they saw some dangers on the horizon, they decided they wanted to retain their money. If you go across to Monster. Monster do not pay a dividend, they retain everything. Their return on invested capital, it's around about the middle of this grouping, and their return on equity, again, in the middle of this grouping. So overall, who do we see being the leader of the pack here? We certainly see it being Coca Cola.