Contemporary Business Studies - Academy of Knowledge Process ...

International Journal of Contemporary Business Studies
Vol: 3, No: 1. January, 2012 ISSN 2156-7506
Available online at http://www.akpinsight.webs.com
5. RETURN ON INVESTED CAPITAL
The return on invested capital signifies the return that the firm earns on the capital invested for a given
period of time.
Return on Invested Capital = NOPAT / Invested capital
TABLE 5. Return on Invested Capital
Table Return on Invested Capital (ROIC) of Private Banks
ROIC 2005 2006 2007 2008 2009 2010
Axis Bank 36.49% 43.36% 43.59% 41.21% 37.19% 30.20%
HDFC Bank 24.97% 43.28% 57.42% 50.54% 55.81% 37.27%
ICICI Bank 21.69% 25.08% 31.36% 29.01% 22.09% 17.79%
ING Vysya Bank 60.34% 46.89% 56.28% 52.41% 40.96% 32.71%
IndusInd Bank 75.71% 78.79% 87.89% 71.92% 48.50% 31.57%
Karnataka Bank 57.74% 66.83% 63.45% 87.48% 107.02% 93.69%
Kotak Mahindra Bank 16.62% 20.86% 13.87% 21.18% 20.13% 21.71%
Above table shows that Axis bank has ROIC of 36.49 % in year 2005 which was decreased at 30.20 % in
year 2010. HDFC bank ROIC was at 24.97% which was increased over a period of time but started to
decrease from year 2008 & in year 2010 it decrease to 37.27%. ICICI bank ROIC was at 21.69 % which
was increased over a period of time but started to decrease from year 2008 & in year 2010 it was decrease
to 17.79%. ING Vyasya bank ROIC was grown at 60.34%. Over a time, it was remaining fluctuated &
decreased to 32.71% in year 2010. IndusInd Bank RIOC was at 75.71% which was remain fluctuated over
a period of time & decreased to 31.57% in year 2010. ROIC of Karnataka bank was 57.74% in year 2005
which was remain in increasing trend & come at 93.69%. ROIC of Kotak Mahindra Bank was 16.62% in
year 2005 & remain in fluctuating trend & increased at 21.71% in year 2010.
6. ECONOMIC VALUE ADDED (IN %)
Economic value added (in %) can be calculated by using following formula.
Economic Value Added (In %) = ROIC – WACC
TABLE 6: Economic Value Added (In %)
Table Economic Value Added (EVA) (In %) in Private Sector Bank
EVA (%) 2005 2006 2007 2008 2009 2010
Axis Bank 34.30% 41.25% 40.88% 39.20% 34.34% 27.96%
HDFC Bank 23.32% 41.56% 56.21% 48.60% 53.39% 35.42%
ICICI Bank 18.84% 22.37% 28.33% 25.35% 18.39% 14.48%
ING Vyasya Bank 57.97% 44.73% 53.88% 50.33% 38.00% 30.36%
IndusInd Bank 73.56% 76.34% 85.14% 68.34% 44.77% 28.47%
Karnataka Bank 55.63% 66.38% 62.55% 86.60% 105.36% 91.14%
Kotak Mahindra Bank 14.35% 18.19% 11.43% 18.02% 16.45% 18.96%
The EVA of Axis bank was 34.30% in 2005 which was remain in a increasing trend till 2007 but from
2008 onwards it started to decrease and in 2010 it was 27.96%. In HDFC bank the EVA increase from
2005 to 2007 but in 2008 it was decrease to 48.60% after that it increase for one year than after again it
was decrease. The EVA of ICICI bank increase from 18.84% to 28.33% in 2005 to 2008 but after that it
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