ROIC
Return on Invested Capital
Profitability RatiosAfter-tax operating profit divided by the total capital invested in the business, both debt and equity. It measures how well the company converts all its capital into operating profit.
Formula
ROIC = NOPAT / (Total Debt + Equity - Cash)
Why it matters
Value is created only when ROIC exceeds the cost of capital. A company growing with ROIC below WACC destroys value with every rupee it reinvests.
Indian example
Related terms
Learn the concept
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