Return on Invested Capital

Return on Invested Capital (ROIC) is a measure of how effectively a company uses the money (borrowed or owned) invested in its operations. It is the ‘return’ expressed as a percentage of ‘invested capital’. In most situations, ‘return’ is the net operating profit after taxes (NOPAT); and the ‘invested capital’ is (total assets less excess cash) but excluding non-interest-bearing liabilities.