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Return on Invested Capital

See what return a company earns on every dollar of debt and equity invested in its operations, net of taxes.

ROIC Inputs

$
$

Alternative Calculation Method

$
$
$

ROIC Results

Return on Invested Capital

NOPAT

Invested Capital

ROIC Interpretation

ROIC Benchmarks

Poor Performance

< 10%

Below cost of capital, value destruction

Average Performance

10% - 15%

Adequate returns, meeting cost of capital

Excellent Performance

> 15%

Superior returns, creating significant value

ROIC Formula

ROIC = NOPAT / Invested Capital

Where:

  • NOPAT: Net Operating Profit After Tax
  • Invested Capital: Total debt + Total equity

Alternative calculation:

  • NOPAT = Operating Income × (1 - Tax Rate)
  • Invested Capital = Working Capital + Fixed Assets

Key Insights

  • ROIC measures how efficiently a company uses capital to generate profits
  • Compare ROIC to the company's cost of capital (WACC)
  • Higher ROIC indicates better capital efficiency and value creation
  • Track ROIC trends over multiple periods for better analysis
  • Industry comparison provides context for ROIC evaluation

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