Return on capital becomes much more useful when paired with the quality of reinvestment opportunities. Three quick checks before you act: 1. Name the mechanism in plain English: A business with strong returns but nowhere to deploy them eventually behaves differently from one that can reinvest at similarly high rates for years. 2. Say why it matters for behavior or portfolio decisions: That is why great businesses can deserve different multiples even with similar current margins. 3. Set the review question: Before sizing up, identify whether the edge comes from cash flow, volatility, timing or balance-sheet structure. Market translation: The market usually pays up not just for current returns, but for the runway behind those returns. Failure mode: The mistake is reading high ROIC as enough on its own without asking whether incremental capital still earns well. The point is not to memorize the label. The point is to know what variable is actually doing the work.