Return On Research Capital - RORC

AAA

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.

INVESTOPEDIA EXPLAINS '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.

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

    Any expenses associated with the research and development of ...
  2. Research And Development - R&D

    Investigative activities that a business chooses to conduct with ...
  3. Patent

    A government license that gives the holder exclusive rights to ...
  4. Development Stage

    A company that is in a preliminary or early state of its corporate ...
  5. Proprietary Technology

    A process, tool, system or similar item that is the property ...
  6. Price-To-Innovation-Adjusted Earnings

    A variation of the price-to-earnings ratio (P/E ratio) that takes ...
Related Articles
  1. Patents Are Assets, So Learn How To ...
    Investing Basics

    Patents Are Assets, So Learn How To ...

  2. Evaluating Pharmaceutical Companies
    Fundamental Analysis

    Evaluating Pharmaceutical Companies

  3. Buying Into Corporate Research & Development ...
    Markets

    Buying Into Corporate Research & Development ...

  4. The History Of Information Machines
    Fundamental Analysis

    The History Of Information Machines

comments powered by Disqus
Hot Definitions
  1. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  2. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  3. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  4. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  5. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  6. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
Trading Center