Free Live ROIC Calculator
Use our ROIC calculator to measure how efficiently a company generates profits from the capital invested by shareholders and lenders.
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EBIT
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What is the return on invested capital?
Return on invested capital (ROIC) shows how effectively a company converts capital from shareholders and lenders into operating profit. It is especially useful for capital-intensive businesses, but it reflects overall capital efficiency rather than the performance of any single asset. A high ROIC usually means management is putting capital to productive use; a low ROIC can mean invested money is not generating enough earnings.
What is the ROIC formula?
ROIC is built from two inputs: NOPAT (net operating profit after tax), calculated as EBIT × (1 − tax rate), and invested capital, which is debt plus equity on the balance sheet. The formula is ROIC = NOPAT / invested capital, or ROIC = [EBIT × (1 − tax rate)] / (debt + equity).
NOPAT = EBIT × (1 - tax rate)
ROIC = NOPAT / invested capital
ROIC = [EBIT × (1 - tax rate)] / (debt + equity)
How to calculate ROIC?
First compute NOPAT. With EBIT of $50,000 and a 25% tax rate, NOPAT = $50,000 × (1 − 0.25) = $37,500. Next add debt and equity for invested capital—for example $121,500 of equity and no debt. Then ROIC = $37,500 / $121,500 ≈ 30.9%. Benchmark that result against industry peers and the company’s own history instead of treating one percentage as a final answer.
