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. 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. 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.
  2. Fundamental Analysis

    Evaluating Pharmaceutical Companies

    Learn how to find a healthy pharmaceutical investment in a market full of weak drugs.
  3. 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.
  4. Fundamental Analysis

    The History Of Information Machines

    Discover how technology changed the way we exchange information when trading.
  5. Fundamental Analysis

    Are accounts receivable used when calculating a company's debt collateral?

    Learn how accounts receivables are recorded as assets on a balance sheet; they are used when calculating a company's total debt collateral.
  6. Economics

    What is the difference between Economic Value Added (EVA) and Market Value Added (MVA)?

    Learn how economic value added (EVA) and market value added (MVA) company valuations differ and the circumstances under which investors should consider each calculation.
  7. Fundamental Analysis

    Work In Progress (WIP)

    Work in progress, also know as WIP, is an asset on the company balance sheet. WIP is the accumulated costs of unfinished goods that are currently in the manufacturing process.
  8. Investing

    Ex Works (EXW)

    Ex Works, or EXW, is an international legal trade term specifying that the seller is responsible to make his goods ready for pick-up at his place of business.
  9. Fundamental Analysis

    Paid-Up Capital

    Paid-Up Capital is listed in the equity section of the balance sheet. It represents the amount of money shareholders have paid into the company by purchasing shares. It’s essentially two accounts, ...
  10. Economics

    Oil Prices' Impact On Oil Transport Sector

    Short-term changes in oil prices and in the volume of oil produced have a marginal impact on the oil transportation industry in Canada.

You May Also Like

Hot Definitions
  1. Multiplier Effect

    The expansion of a country's money supply that results from banks being able to lend. The size of the multiplier effect depends ...
  2. Command Economy

    A system where the government, rather than the free market, determines what goods should be produced, how much should be ...
  3. Prospectus

    A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details ...
  4. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  5. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  6. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
Trading Center