Return On Invested Capital (ROIC)
Return on Invested Capital (ROIC) is a profitability ratio that measures how efficiently a company generates returns from its invested capital. It is calculated by dividing the company’s net operating profit after tax (NOPAT) by its invested capital. ROIC is a key indicator of a company’s ability to create value for shareholders by efficiently using its capital resources.
Key Takeaways
- Measures efficiency in generating returns from capital.
- Calculated using NOPAT and invested capital.
- Indicates value creation for shareholders.
- Crucial for assessing company performance.
