How can a company have declining profitability

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Question: Between 1997 and 2004, Microsoft's ROIC fell from 32% to 17.5%. Over the same period, Microsoft's profi ts grew from $3.45 billion to $11.33 billion. How can a company have declining profitability (as measured by ROIC) but growing profits? What do you think explains this situation at Microsoft? For 2004, analysts predicted that Microsoft's ROIC would jump to 35%. Why do you think this was the case? Was it due to any change in the company's strategy?

Reference no: EM131702788

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