Reinvestment rate

What it measures¶

NOPAT is net operating profit after tax — operating profit minus the tax on it. The reinvestment rate is the share of NOPAT a company spent on growing: (capital expenditure + increase in working capital − depreciation and amortisation) ÷ NOPAT. Working capital is current assets minus current liabilities — mainly stock and money owed by customers, less money owed to suppliers. When NOPAT is not positive, the panel uses a revenue-based form instead and names it.

Why it is on the page¶

Growth has to be paid for. The growth panel's identity — growth = reinvestment rate × return on new invested capital — links what a company reinvests to how fast it can grow. A company growing quickly while reinvesting little is either earning a very high return on its new capital or paying for growth some other way.

Thresholds, their source and the population they were fitted on¶

The row draws no zones; the rate is an input to the identity, judged through the return it implies (RONIC), not on its own.

• Source: Koller, Goedhart and Wessels, Valuation (McKinsey & Company).
• Fitted on: no population — an accounting identity.
• Evidence grade: practitioner convention.

A worked example¶

Celestica, as the Fundamentals page showed it on 9 August 2026: a reinvestment rate of 30.59% in fiscal 2025 and 46.75% in fiscal 2024.

What “No verdict” means here¶

The row carries no verdict of its own. It reads insufficient data when capital expenditure, working capital or D&A is not stored, and the condition summary's Growth paid for check reads not applicable when there was no net reinvestment.

What the verdict is and is not¶

The figure describes how much of one year's operating profit went into growth. It is not a judgement of whether that was wise, not a forecast, and not an instruction to trade the shares.