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Return on Invested Capital Formula

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Return on Invested Capital (ROIC) assesses a company's efficiency in allocating capital to profitable investments. Check FAQs

ROIC = \frac{NOPAT}{TC}

ROIC - Return on Invested Capital?NOPAT - Net Operating Profit After Tax?TC - Total Invested Capital?

Return on Invested Capital Example

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Here is how the Return on Invested Capital equation looks like with Values.

Here is how the Return on Invested Capital equation looks like with Units.

Here is how the Return on Invested Capital equation looks like.

20 = \frac{1E+6}{50000}

20 = \frac{1E+6}{50000}

20 = \frac{1E+6}{50000}

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Return on Invested Capital Solution

Follow our step by step solution on how to calculate Return on Invested Capital?

FIRST Step Consider the formula

ROIC = \frac{NOPAT}{TC}

Next Step Substitute values of Variables

∴

ROIC = \frac{1E+6}{50000}

Next Step Prepare to Evaluate

∴

ROIC = \frac{1E+6}{50000}

LAST Step Evaluate

∴

ROIC = 20

Return on Invested Capital Formula Elements

Variables

Return on Invested Capital

Return on Invested Capital (ROIC) assesses a company's efficiency in allocating capital to profitable investments.

Symbol: ROIC

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Return on Invested Capital

Net Operating Profit After Tax

Net Operating Profit After Tax is a company's after-tax operating profit for all investors, including shareholders and debt holders.

Symbol: NOPAT

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Net Operating Profit After Tax

Total Invested Capital

Total Invested Capital is the total amount of money a company raises through the sale of shares and the issuance of bonds.

Symbol: TC

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Total Invested Capital

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How to Evaluate Return on Invested Capital?

Return on Invested Capital evaluator uses Return on Invested Capital = Net Operating Profit After Tax/Total Invested Capital to evaluate the Return on Invested Capital, The Return on Invested Capital assesses a company's efficiency in allocating capital to profitable investments. Return on Invested Capital is denoted by ROIC symbol.

How to evaluate Return on Invested Capital using this online evaluator? To use this online evaluator for Return on Invested Capital, enter Net Operating Profit After Tax (NOPAT) & Total Invested Capital (TC) and hit the calculate button.

FAQs on Return on Invested Capital

What is the formula to find Return on Invested Capital?

The formula of Return on Invested Capital is expressed as Return on Invested Capital = Net Operating Profit After Tax/Total Invested Capital. Here is an example- 20 = 1000000/50000.

How to calculate Return on Invested Capital?

With Net Operating Profit After Tax (NOPAT) & Total Invested Capital (TC) we can find Return on Invested Capital using the formula - Return on Invested Capital = Net Operating Profit After Tax/Total Invested Capital.

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Return on Invested Capital Formula

Return on Invested Capital Example

Return on Invested Capital Solution

Return on Invested Capital Formula Elements

Other formulas in Financial Metrics category

How to Evaluate Return on Invested Capital?

FAQs on Return on Invested Capital

Variable Name