Return on Invested Capital Calculator

Calculate the efficiency of an investment by comparing its profit to its capital cost. ROIC is a key metric for evaluating the profitability of an investment or a business.

Input Parameters

Calculation Results

Calculation Formula

ROIC = (Net Income + Depreciation) / Total Invested Capital

Where:
- Net Income: The company's profit after tax and interest
- Depreciation: The reduction in value of tangible assets
- Total Invested Capital: The total amount of capital invested in the business

Return on Invested Capital Calculator Usage Guide

Learn how to use the Return on Invested Capital Calculator calculator and its working principles

What is Return on Invested Capital (ROIC)?

ROIC is a financial metric used to assess a company's efficiency in generating profits from its capital investments. It measures the return generated on the capital invested in the business, indicating how well the company is using its capital to generate profits.

How to Use the Calculator

  1. Enter the Net Income of the company for the period you want to evaluate.
  2. Enter the Depreciation for the same period.
  3. Enter the Operating Cash Flow for the period.
  4. Enter the Total Invested Capital of the company.
  5. Click the Calculate button to compute the ROIC.
  6. The result will be displayed as a percentage in the ROIC (%) field.

Interpreting the Results

A higher ROIC indicates that the company is more efficient at generating profits from its capital. Generally, an ROIC higher than the company's cost of capital is considered good, while an ROIC lower than the cost of capital may indicate poor performance.

Example

If a company has a net income of $100,000, depreciation of $20,000, and total invested capital of $500,000, the ROIC would be calculated as follows:

ROIC = ($100,000 + $20,000) / $500,000 = $120,000 / $500,000 = 0.24 or 24%