What is return when looking at a company? Well, we start by looking at our formula. And that's return divided by invested capital. We really need to understand the invested capital first. And the invested capital comes from your financiers, and it's what they've used to buy operating assets. Okay, now we understand that bit. Now let's try and understand the return. Well, the return is that available to the financiers. It's their reward for the invested capital that they put up. Alternatively, if your invested capital has been used by operating assets, then your return must be the return from operations. So, now we've got two ways to understand return. Let's go looking for that figure in an income statement. There are four different profit figures available in this income statement. The first is gross profit, the second, operating profit, the third, profit before tax, and the last one is net income or net profit. We need one of these that is a return available to financiers and a return from operations. And that is the operating profit. Your operating profit is your return from operations. And if we look at the very next line down from operating profit, that's interest. Interest is money going out to one of your financiers. So, I need the line item before that. I need the return available to financiers. Another term we might have for operating profit is EBIT, earnings before interest and tax. So, now we can update our return on capital formula. It's going to be EBIT times by one minus the tax rate, divided by invested capital. So, why do we have this one minus the tax rate? Well, imagine your tax rate is 20%. Then that means we're gonna be left with 80% of our EBIT. But why? Well, the amount of money paid out in tax, that is not money that's available to financiers. The government is not a financier here, so we need to take out that cost. And what's left over is what's available to financiers. So, now we have our updated formula, EBIT times one minus tax rates, all divided by invested capital. Now if we are asked to work out return on average capital employed, then that requires the average of capital from this year and last year. Imagine at the end of last year I had invested capital of 100, at the end of this year, I had invested capital of 120. That means over the period, over that year, our average capital would've been 110. And it's that average that's been earning us the return during that year.