Description
Similar to Return On Equity (ROE), Return On Invested Capital (ROIC) is a measure of return generated by a company relative to capital employed. However, ROIC factors in all capital invested in the business, including debt (i.e., bonds, etc.). The ROIC ratio also uses Net Operating Profit After Taxes (NOPAT) in the numerator in order to control for capital structure.
Calculation
Operating Profit X (1 - Tax Rate) / (Debt + Equity)