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Return on Invested Capital (ROIC) Calculator









Formula

The formula to calculate the Return on Invested Capital (ROIC) is:

ROIC=NOPATInvested Capital×100%

Where NOPAT is calculated as:

NOPAT=EBIT×(1tax rate)

And Invested Capital is the sum of debt and equity:

Invested Capital=Debt+Equity

Description

Return on Invested Capital (ROIC) measures a company's efficiency at allocating the capital under its control to profitable investments. It indicates how well a company is using its money to generate returns.

Example Calculation

Let's assume the following:

To calculate the NOPAT:

NOPAT=50,000×(10.25)=37,500

To calculate the Invested Capital:

Invested Capital=0+121,500=121,500

To calculate the ROIC:

ROIC=37,500121,500×100%30.86%

Therefore, the Return on Invested Capital (ROIC) is approximately 30.86%.