Long Term Economic Spread

Academic Long Term Economic Spread (Invested Capital Based)

= ROIC - Cost of Capital

Or

= Net Income Growth - Cost of Capital

which applies to the area of Invested Capital.

.

Long Term Economic Spread (Total Capital Based)

= ROA - Cost of Total Assets

Or

= Net Income Growth - Cost of Total Assets

which applies to the area of Total Capital.

.

Total Capital = Total Assets

.

It is advisable to use CICC in the place of the Cost of Capital and CTAC in place of the Cost of Total Assets.

They are clean from unstable Beta and Risk Premium.