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How to calculate Return on invested capital (ROIC)

The Return on invested capital (ROIC) formula, with plain worked examples you can check yourself.

Return on invested capital (ROIC) = NOPAT ÷ IC × 100

The result is a percentage (%).

Worked examples

NOPAT = 32 · IC = 400Return on invested capital (ROIC) = 8%
NOPAT = 80 · IC = 1000Return on invested capital (ROIC) = 8%
NOPAT = 48 · IC = 400Return on invested capital (ROIC) = 12%

How to use it

  1. Write down the values for each letter in the formula.
  2. Do the brackets first, then divide or multiply.
  3. Multiply by 100 to show the answer as a percentage.
  4. Compare the answer with last period or with a competitor to see if it is good or bad.

This formula belongs to Valuation & Deals.

Related terms

APIDue diligenceMergerAcquisitionGoodwill

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