What the last dollar reinvested is actually earning — the change in operating profit divided by the change in invested capital, trailing twelve months versus the prior twelve.
Over the twelve months ended August 2026, each incremental dollar of invested capital produced 36.0 cents of additional annual operating profit (pre-tax), or roughly 27 cents after an illustrative 25% tax. Against any plausible cost of capital of 8–12%, growth is creating value: the reinvested dollar earns a multiple of its hurdle.
Two qualifications matter, and they change the management agenda entirely.
First, the marginal dollar earns far less than the average dollar. Trailing-twelve-month EBIT of $1.66M against average invested capital of ~$2.0M implies an average ROIC of roughly 82% (57% on ending capital). Incremental ROIC of 36% is less than half that. Capital intensity per dollar of profit is rising, quickly.
Second, almost none of the new capital bought growth. Revenue grew 16.9%; invested capital grew 162%. Decomposing the $1.81M capital build shows it is overwhelmingly working-capital slippage, not scale: days sales outstanding widened from 36 to 65 days and inventory days from 52 to 105. Had working-capital efficiency simply held at prior-year levels, the same revenue growth would have required no net new capital at all — the arithmetic ΔIC turns negative (−$0.2M). Approximately $2.0M of capital is trapped in receivables and inventory beyond what the growth itself required.
Verdict. Growth is comfortably value-creating at the margin — but the ROIIC of 36% is a blend of a nearly capital-free operating model and a sharp, costly deterioration in working-capital discipline. The highest-return "investment" available is not more growth capital; it is collections and inventory turns, which would release roughly $2.0M of cash at zero risk.
| Measure | LTM−1 Sep 2024 – Aug 2025 | LTM Sep 2025 – Aug 2026 | Change |
|---|---|---|---|
| Revenue | $10,475,108 | $12,244,025 | +$1,768,917 (+16.9%) |
| Cost of goods sold | (6,618,568) | (7,409,437) | +790,869 |
| Operating expense | (2,843,953) | (3,169,950) | +325,998 |
| Operating profit (EBIT) | $1,012,588 | $1,664,638 | +$652,050 |
| EBIT margin | 9.7% | 13.6% | +3.9 pts |
| Invested capital (period end) | $1,121,465 | $2,934,419 | +$1,812,953 |
The incremental EBIT margin — added profit per added revenue dollar — was 36.9%, nearly four times the prior-period base margin of 9.7%. Operating leverage is strong: opex grew 11.5% against 16.9% revenue growth, and gross margin improved from 36.8% to 39.5%.
| Basis | ΔProfit | ΔCapital | ROIIC |
|---|---|---|---|
| Pre-tax EBIT, operating capital (ex-cash) — headline | $652,050 | $1,812,953 | 36.0% |
| NOPAT @ 25% illustrative tax, ex-cash | $489,038 | $1,812,953 | 27.0% |
| Pre-tax EBIT, capital including cash | $652,050 | $2,447,998 | 26.6% |
| NOPAT @ 25%, capital including cash | $489,038 | $2,447,998 | 20.0% |
Under every definition the marginal dollar clears a normal 8–12% hurdle by a wide margin. The conclusion is robust to methodology.
Monthly revenue stepped from a ~$870K base to a $1.0–1.15M run-rate beginning late 2025, while monthly EBIT roughly doubled — profit growth is broad-based across the LTM window, not a single-month artifact. (November 2025 and February 2026 show margin spikes consistent with promotional or mix effects; August 2026 EBIT dipped on a COGS-heavy month.)
Invested capital was essentially flat near $0.9–1.1M for the first thirteen months, then compounded steeply from Q4 2025 onward — an inflection that outpaces the revenue inflection shown in Section 03. The gap between those two slopes is the working-capital problem quantified below.
Receivables and inventory account for +$2.43M of gross build, only partially offset by suppliers and accruals financing $0.63M more of the balance sheet. Fixed-asset investment is a rounding error ($11K net — the business is asset-light by design). This is not a capacity story; it is a cash-conversion story.
| Working-capital metric | Aug 2025 | Aug 2026 | Change |
|---|---|---|---|
| Days sales outstanding (DSO) | 36.2 | 64.5 | +28.2 days |
| Days inventory outstanding (DIO) | 52.0 | 104.8 | +52.8 days |
| Days payables outstanding (DPO) | 43.0 | 60.5 | +17.5 days |
| Cash conversion cycle | 45.2 | 108.8 | +63.6 days |
Receivables now represent 64.5 days of sales — up from 36.2 — and inventory sits at 104.8 days of cost. Payables stretched too (43 → 61 days), which flattered the net number; without that supplier financing the capital build would have exceeded $2.2M.
Hold DSO and DIO at their August 2025 levels and re-price the balance sheet at actual LTM volumes:
| Component | Actual Aug-26 | At constant Aug-25 efficiency | Excess capital |
|---|---|---|---|
| Accounts receivable | $2,163,312 | $1,214,344 | $948,968 |
| Inventory | $2,128,262 | $1,055,501 | $1,072,761 |
| Total excess working capital | $2,021,729 |
This is the deeper answer to "what is the last dollar earning?" The growth dollar earns an extraordinary return — incremental margins of 37% against near-zero required capital at constant turns. The slippage dollar earns nothing. The blended 36% ROIIC averages the two, and the blend will deteriorate mechanically if the cash-conversion cycle keeps widening at 5+ days per month.
Income − COGS − Expense account types, posting transactions only, dated windows. Excludes Other Income/Expense (predominantly interest expense of ~$26K LTM and a $223 asset-sale gain) so the numerator is financing-neutral, matching the invested-capital denominator.
Operating approach, point-in-time at each window end:
+ Accounts receivable
+ Inventory & other current assets
+ Net fixed assets
− Accounts payable
− Accrued & other current liabilities (incl. sales tax payable)
Cash and equity are excluded (cash is not operationally required at this scale; there is no debt other than trivial interest charges, and no long-term liabilities are on the ledger).
LTM: Sep 2025 – Aug 2026 · LTM−1: Sep 2024 – Aug 2025. Capital measured at each window's closing date. Point-to-point ΔIC is the standard ROIIC convention; the sensitivity table in Section 02 shows the result is robust to including cash.
The general ledger in this account begins with opening balances posted in September 2024 (FY 2023 contains 24 immaterial rows totalling $0 revenue; all balance-sheet accounts are zero before Sep 2024). Twenty-four months is therefore the longest window the data can support. The two-window LTM comparison used here is the standard ROIIC construction for that horizon; the 3–5 year version becomes computable from September 2027 onward and the appendix queries are parameterized to produce it.
All data was extracted via SuiteQL against the NetSuite GL on 2026-08-24. Queries are re-runnable as written; shift the date literals to re-measure future windows.
SELECT
a.accttype,
ROUND(SUM(-tal.amount), 2) AS signed_amount
FROM transactionaccountingline tal
JOIN transaction t ON tal.transaction = t.id
JOIN account a ON tal.account = a.id
WHERE t.posting = 'T'
AND t.trandate BETWEEN TO_DATE('2025-09-01','YYYY-MM-DD')
AND TO_DATE('2026-08-31','YYYY-MM-DD') -- LTM; use 2024-09-01..2025-08-31 for LTM-1
AND a.accttype IN ('Income','OthIncome','COGS','Expense','OthExpense')
GROUP BY a.accttype
ORDER BY a.accttype
SELECT
a.id,
a.acctnumber,
a.fullname,
a.accttype,
ROUND(SUM(CASE WHEN t.trandate <= TO_DATE('2025-08-31','YYYY-MM-DD') THEN tal.amount ELSE 0 END), 2) AS bal_aug25,
ROUND(SUM(tal.amount), 2) AS bal_aug26
FROM transactionaccountingline tal
JOIN transaction t ON tal.transaction = t.id
JOIN account a ON tal.account = a.id
WHERE t.posting = 'T'
AND t.trandate <= TO_DATE('2026-08-31','YYYY-MM-DD')
AND a.accttype IN ('Bank','AcctRec','OthCurrAsset','FixedAsset','AcctPay','OthCurrLiab')
GROUP BY a.id, a.acctnumber, a.fullname, a.accttype
ORDER BY a.accttype, ABS(SUM(tal.amount)) DESC
SELECT
TO_CHAR(t.trandate, 'YYYY-MM') AS month,
ROUND(SUM(CASE WHEN a.accttype = 'Income' THEN -tal.amount ELSE 0 END), 2) AS revenue,
ROUND(SUM(CASE WHEN a.accttype = 'COGS' THEN tal.amount ELSE 0 END), 2) AS cogs,
ROUND(SUM(CASE WHEN a.accttype = 'Expense' THEN tal.amount ELSE 0 END), 2) AS opex
FROM transactionaccountingline tal
JOIN transaction t ON tal.transaction = t.id
JOIN account a ON tal.account = a.id
WHERE t.posting = 'T'
AND t.trandate >= TO_DATE('2024-01-01','YYYY-MM-DD')
AND a.accttype IN ('Income','COGS','Expense')
GROUP BY TO_CHAR(t.trandate, 'YYYY-MM')
ORDER BY TO_CHAR(t.trandate, 'YYYY-MM')
SELECT
TO_CHAR(t.trandate, 'YYYY-MM') AS month,
a.accttype,
ROUND(SUM(tal.amount), 2) AS net_change
FROM transactionaccountingline tal
JOIN transaction t ON tal.transaction = t.id
JOIN account a ON tal.account = a.id
WHERE t.posting = 'T'
AND t.trandate <= TO_DATE('2026-08-31','YYYY-MM-DD')
AND a.accttype IN ('Bank','AcctRec','OthCurrAsset','FixedAsset','AcctPay','OthCurrLiab')
GROUP BY TO_CHAR(t.trandate, 'YYYY-MM'), a.accttype
ORDER BY TO_CHAR(t.trandate, 'YYYY-MM'), a.accttype
Derived measures: EBIT = Income − COGS − Expense; Invested capital = AcctRec + OthCurrAsset + FixedAsset − AcctPay − OthCurrLiab (signs: asset types accumulate positive, liability types negative, so IC is the simple sum); ROIIC = ΔEBIT ÷ ΔIC; DSO = AR ÷ LTM revenue × 365; DIO = inventory ÷ LTM COGS × 365; DPO = AP ÷ LTM COGS × 365. Note: account.acctname is not exposed to SuiteQL in this account — use fullname.