2 Discuss potential explanations fot the widening of the dis

Solution

In the recent decade, a large number of companies are earning very high ROICs as compared to earlier times. This is due to development in technologies and creation of entry barrier such as patent protection which has provided them with pricing power and also made their operations more efficient. This has resulted in large cash flows and high ROIC. On the contrary in earlier times, since such wide technological differences was not present, only a very limited number of companies earned high ROICs and more number of companies were aggregated in the middle ROICs level.