Operating Assets - inclusion of cash or not

CFA Level II
#1

Hello,

In FRA integration techniques when we are looking at operating assets, we take total assets and subtract out cash and short term investments.

In a solution paper regarding ROIC (from equity chapter) it says that 'ROIC is NOPAT/ Invested capital, where invested capital is operating assets INCLUDING cash.

Which one is it? Thanks

#2

edit: nvm

#3

Invested Capital excludes cash, at least as far as ROIC is concerned

I have noticed that the same term can have different meanings in different contexts (eg FRA vs Equity)

#4

Thanks both,

Can anyone shed any more light on the differences between Equity and FRA on this matter? It feels quite pivotal. A mock exam asked about the use of cash in operating assets with ROIC and I said no impact as I was thinking of NOA from the accruals chapter in FRA which removes cash…