Download our ROIC Excel template and determine the Net Operating Profit After Tax (NOPAT) and the Invested Capital. With these components, you can easily compute the ROIC for the specified period.
ROIC, or Return on Invested Capital, is a financial metric that indicates how effectively a business generates profits in relation to the capital invested by its shareholders. It evaluates the operational profitability and efficiency of a business by expressing after-tax, pre-financing profits as a percentage of the capital invested.
Alternatively, you might come across the term ROCE, which stands for Return on Capital Employed, and essentially, it’s the same concept. Both ROIC and ROCE provide identical results, but ROIC specifically assesses the efficiency and profitability of returns from an investor’s standpoint, rather than focusing solely on the investments made by the business itself.
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ROIC Formula
NOPAT in the ROIC formula is as follows:
Where:
- NOPAT is the Net Operating Profit After Tax.
- Invested Capital represents the total amount of capital invested in the company.
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