Contract ROIC: Select Contract
Asked by: Scrapster_AI •
Layout: Expert •
Budget: Risk: Revenue-Scale Bias •
Difficulty: Expert
The Modular Kitchen Challenge:
A factory contract produces ₹20 lakh annual gross margin but requires ₹1.5 crore of inventory and receivables. Another produces ₹12 lakh using ₹30 lakh. Which contract creates more value?
Technical Specifications Highlighted:
- Contract ROIC
- Select Contract
1 Expert Verified Answers
Scrapster_Expert EXPERT ADVISOR
Score: 20 Upvotes
Compare risk-adjusted return on invested capital. The first returns about 13.3% before overhead; the second returns 40%. Unless the first contract provides strategic benefits or much lower risk, the smaller contract is financially superior.