Return on invested capital. The ROIC Calculator takes operating profit (ebit), tax rate, total debt, shareholders' equity, cash not needed for operations and returns return on invested capital plus net operating profit after tax, invested capital. Results update as you type, and the formula is shown under the result so you can repeat it in your own spreadsheet.
Financial ratios are only useful in comparison: against last year, against a competitor, or against the benchmark for your industry. Take the figures from the same set of accounts, note whether they are yearly or monthly, and read each ratio alongside the others in its family. Use the worked example below to check the maths against your own figures.
How the ROIC Calculator works
ROIC compares after-tax operating profit with all the capital tied up in the business, whoever provided it. A business creates value only when ROIC exceeds its cost of capital (see the WACC calculator).
Worked example
With the example values (operating profit (ebit) of $300,000, tax rate of 25%, total debt of $500,000, shareholders' equity of $1,000,000, cash not needed for operations of $100,000), the return on invested capital is 16.07%; net operating profit after tax $225,000.00, invested capital $1,400,000.00. Change any figure above and the result updates immediately; use Copy results to paste the summary into a note or email.
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Frequently Asked Questions
How is return on invested capital calculated?
ROIC = EBIT × (1 − tax rate) ÷ (debt + equity − excess cash).
Which figures do I need?
Operating profit (ebit), tax rate, total debt, shareholders' equity, cash not needed for operations. Take them from the same period and the same set of accounts or reports so the ratio is consistent, and check the example values as a guide to the units expected.
What is a good value for this ratio?
Benchmarks differ by industry, size and business model, so compare with companies like yours and with your own history. A ratio moving in the wrong direction for several periods matters more than any single number.
