ROIC
- Created by
- Renato Passos, Eng. de Software
- Reviewed by
- Renato Passos, Eng. de Software
Last updated: Apr 18, 2026
About this calculator
The ROIC (Return on Invested Capital) calculator measures how effectively a company generates net operating profit after taxes using its invested capital. The formula is: ROIC = NOPAT / Invested Capital. Use it to evaluate value creation or compare performance among competitors.
To calculate, you need NOPAT (Net Operating Profit After Taxes) and Invested Capital (sum of debt and equity). The result is expressed as a percentage, showing if capital is well utilized. Values above 15% are positive in sectors like technology, but vary by industry.
Apply this tool for investment analysis, EBITDA reviews, or corporate financial planning. Note: Cross-sector comparisons can be misleading due to differing operational margins and capital structures. Always pair with indicators like ROE and EBIT/Assets.
Incorrect NOPAT or Invested Capital data can invalidate results. Recommend sourcing figures directly from the income statement and balance sheet, adjusting future projections with realistic scenarios.
Frequently asked questions
What is NOPAT?
NOPAT is net operating profit after taxes, representing the true return on invested capital regardless of capital structure.
How to define Invested Capital?
Add long-term debt and equity, excluding non-operational assets like cash and short-term investments.
Is ROIC better than ROI?
Yes, because ROIC considers the cost of capital rather than just the return on initial investment.
What's a good ROIC rate?
It depends on the sector, but generally above 10% indicates efficiency while below 5% suggests poor resource use.
When not to use ROIC?
Avoid it for companies in bankruptcy or with complex capital structures, where the metric loses relevance.