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Field dictionary

Finance, translated.

Definitions are only useful when you know why they change a decision. Search by word, concept, or consequence.

2 terms

Compound growth

Basics

Returns earned on both original capital and prior returns.

Why it matters: Time, consistency, taxes, fees, and avoiding permanent loss all affect compounding.

ROIC

Business

Return on invested capital: an estimate of operating profit earned on capital used by the business.

Why it matters: Sustained attractive incremental returns can support compounding.