New ratios preview (ROIC, WACC, and more)

marco
Sun, 15 Feb 2026 05:40:26 +0000

yuvaltaylor:

ChatGPT? It kind of looks like it. Don't do that: ChatGPT is terrible at accounting measures. It would fail every single final exam in any accounting class.

Correct. GPT read all the papers that have empirical results. That's what matters.

P123 is not for accounting classes or valuation classes. P123 wants to provide a library of factors that have high IC cross sectionally, relative to each other. Factors that do well in ranking systems as well as ML.

We are about to unveil a tool to quickly test IC for any factor or formula. Whether it's from a textbook or novel. We'll see which versions are better.

Investopedia? Who are they really? There's no expert behind it. Founders never wrote a finance paper. Mostly journalists it seems. Today it's part of the People Inc. media family (which includes brands like People magazine and Better Homes & Gardens). Hum, they must care a lot about the factors they publish.

Below is FactSet official ROIC btw. That's it. Simple. And Morningstar probably has something just as simple.

They will be tested soon with our new tool. Who knows, it might be the best one of them all.

FactSet ROIC = 100 * FF_NET_INC / FF_INVEST_CAP
FactSet FF_INVEST_CAP = FF_SHLDRS_EQ + FF_DEBT_LT