Return On Research Capital - RORC


DEFINITION of 'Return On Research Capital - RORC'

A calculation used to assess the revenue a company brings in as a result of expenditures made on research and development activities. Return on research capital (RORC) is a component of productivity and growth, since research and development (R&D) is one of the ways in which companies develop new products and services for sale. This metric is commonly used in industries that rely heavily on R&D such as the pharmaceutical industry.

BREAKING DOWN 'Return On Research Capital - RORC'

Companies face an opportunity cost when examining the use of their funds. They can spend money on tangible assets, real estate or capital improvements, or they can invest in R&D. Investments made in research may take a number of years before tangible results are seen, and the return typically varies between industries and even within sectors of a particular industry.

  1. Research And Development (R&D) ...

    Any expenses associated with the research and development of ...
  2. Proprietary Technology

    A process, tool, system or similar item that is the property ...
  3. Research And Development - R&D

    Investigative activities that a business chooses to conduct with ...
  4. Development Stage

    A company that is in a preliminary or early state of its corporate ...
  5. Price-To-Innovation-Adjusted Earnings

    A variation of the price-to-earnings ratio (P/E ratio) that takes ...
  6. Patent

    A government license that gives the holder exclusive rights to ...
Related Articles
  1. Technical Indicators

    Key Financial Ratios to Analyze Biotech Companies

    Explore the rapidly growing biotechnology industry, and learn some of the key financial ratios investors use to analyze companies in the industry.
  2. Investing Basics

    Patents Are Assets, So Learn How To Value Them

    Innovation is the key to staying on top. Find out how companies protect their ideas and how to figure out how much they're worth.
  3. Fundamental Analysis

    Evaluating Pharmaceutical Companies

    Learn how to find a healthy pharmaceutical investment in a market full of weak drugs.
  4. Markets

    Buying Into Corporate Research & Development (R&D)

    Investors take note: companies that cut research and development are in danger of saving today but losing big tomorrow.
  5. Fundamental Analysis

    The History Of Information Machines

    Discover how technology changed the way we exchange information when trading.
  6. Active Trading

    An Introduction To Depreciation

    Companies make choices and assumptions in calculating depreciation, and you need to know how these affect the bottom line.
  7. Entrepreneurship

    How Gross Margin Can Make or Break Your Startup

    Find out how your startup's gross margin can impact your business, including why a mediocre margin may spell disaster for a budding business.
  8. Fundamental Analysis

    Are Amazon Profits Here to Stay?

    Amazon is starting to look like a steadily profitable company. Is this really the case? Should investors even be hoping for profitability?
  9. Fundamental Analysis

    Does Costco Have Room to Grow Its Margins?

    Costco has historically capped their margins well below industry standard. Might now be the time for them to raise them and potentially increase profitability?
  10. Markets

    Operating Cash Flow: Better Than Net Income?

    Differences between accrual accounting and cash flows show why net income is easier to manipulate.
  1. Can working capital be depreciated?

    Working capital as current assets cannot be depreciated the way long-term, fixed assets are. In accounting, depreciation ... Read Full Answer >>
  2. What does high working capital say about a company's financial prospects?

    If a company has high working capital, it has more than enough liquid funds to meet its short-term obligations. Working capital, ... Read Full Answer >>
  3. How can working capital affect a company's finances?

    Working capital, or total current assets minus total current liabilities, can affect a company's longer-term investment effectiveness ... Read Full Answer >>
  4. What are working capital costs?

    Working capital costs (WCC) refer to the costs of maintaining daily operations at an organization. These costs take into ... Read Full Answer >>
  5. What does low working capital say about a company's financial prospects?

    When a company has low working capital, it can mean one of two things. In most cases, low working capital means the business ... Read Full Answer >>
  6. Does unearned revenue affect working capital?

    Unearned revenue, or deferred revenue, typically represents a company's current liability and affects its working capital ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
  2. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
  3. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  4. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
  5. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  6. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
Trading Center