ROIC Calculator
ROIC, or return on invested capital, shows how much profit a business earns on the money put into it. Enter the operating profit, the tax rate, and the debt and equity behind the business.
- Free
- Works offline after your first visit
- Saves on this device
- No sign-up
- Updated
How it works
Profit after tax on operations is the operating profit times one minus the tax rate. Invested capital is debt plus equity. ROIC is the first divided by the second, shown as a percent.
This is one common way to write the measure. Other versions adjust for cash, leases or one-time items, so compare like with like.
Worked example
With operating profit of $500,000.00 and a tax rate of 25%, the profit after tax is $375,000.00. On invested capital of $1,000,000.00, the return is 37.5%.
Questions
Why add debt and equity?
Both are money put into the business to earn profit. Adding them gives the whole base the profit has to pay back.
What is a good ROIC?
It depends on the industry and on what the money costs. Compare the figure with other companies in the same field.
Where do I find these numbers?
They come from a company's financial statements, often in its annual report. Use the same period for profit and for capital.
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