39  / SERVICE EXCELLENCE The Operating ratio provides the percentage of revenues used to operate the railway. A lower percentage normally indicates higher efficiency in the operation of the railway. The Company’s Operating ratio was 59.9% in 2019, a 140 basis point improvement from 61.3% in 2018. This improvement was primarily due to: This improvement was partially offset by: There were no adjustments to the operating ratio in 2019 and 2018. The Company’s Operating ratio was 61.3% in 2018, a 30 basis point improvement from 61.6% in 2017. This improvement was primarily due to higher volumes and the efficiencies generated from improved operating performance and asset utilization. This improvement was partially offset by: Adjusted operating ratio was 61.3% in 2018, a 110 basis point improvement from 62.4% in 2017. This improvement reflects the same factors discussed above for the improvement in Operating ratio, except that Adjusted operating ratio in 2017 excludes the $51 million management transition recovery. Return on invested capital ("ROIC") is a measure of how productively the Company uses its long-term capital investments, representing critical indicators of good operating and investment decisions made by management, and is an important performance criteria in determining certain elements of the Company's long-term incentive plan. ROIC was 17.9% in 2019, a 260 basis point increase compared to 15.3% in 2018, primarily due to higher Operating income and FX translation gains on debt and lease liabilities in 2019 compared to FX translation losses on debt in 2018. This increase was partially offset by a higher average invested capital base due to higher Retained earnings from Net income, partially offset by lower Common Shares due to the Company's share repurchase program. ROIC was 15.3% in 2018, a 520 basis point decrease compared to 20.5% in 2017 primarily due to: This decrease was partially offset by higher Operating income and higher Other components of net periodic benefit recoveries. Adjusted ROIC was 16.9% in 2019, a 70 basis point increase compared to 16.2% in 2018, primarily due to higher Operating income. This increase was partially offset by the increase in adjusted average invested capital primarily due to higher Adjusted income, partially offset by by lower Common Shares due to the Company's share repurchase program. Adjusted ROIC was 16.2% in 2018, a 150 basis point increase compared to 14.7% in 2017 due to higher Adjusted operating income and higher Other components of net periodic benefit recoveries. This increase was partially offset by the increase in adjusted average invested capital primarily due to higher Adjusted income, partially offset by by lower Common Shares due to the Company's share repurchase program. ROIC and Adjusted ROIC are defined and reconciled in Non-GAAP Measures of this Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Fluctuations in FX affect the Company’s results because U.S. dollar-denominated revenues and expenses are translated into Canadian dollars. U.S. dollar- denominated revenues and expenses increase (decrease) when the Canadian dollar weakens (strengthens) in relation to the U.S. dollar. In 2019, the impact of a stronger U.S. dollar resulted in an increase in total revenues of $87 million, an increase in total operating expenses of $48 million and an increase in interest Impact of Foreign Exchange on Earnings Return on Invested Capital • cost inflation. • higher stock-based compensation; and • increased operating expense associated with higher casualty costs in 2019; • the efficiencies generated from improved operating performance and asset utilization. • the favourable impact of changes in fuel prices; and • higher freight rates; • the unfavourable impact of changes in fuel prices; • cost inflation; and • management transition recoveries of $51 million associated with Mr. E. Hunter Harrison's retirement as CEO of CP in 2017. • a higher average invested capital base due to higher Retained earnings from Net income; • higher Income tax expense due to a lower income tax recovery associated with changes in tax rates; and • the unfavourable impact of FX translation losses on debt in 2018 compared to FX translation gains in 2017.