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Return On Invested Capital Calculator

Work out return on invested capital instantly with clear inputs, formula shown and shareable results.

About Return On Invested Capital Calculator

ROIC is after-tax operating profit over the capital actually invested in the business. Value is created only when ROIC exceeds the cost of capital, and the spread multiplied by invested capital is the economic profit earned.

Formula

ROIC and economic profit

NOPAT = EBIT(1-t); ROIC = NOPAT / invested capital; EP = (ROIC - WACC) × IC

Worked example

With the default values below, Return On Invested Capital Calculator returns Return On Invested Capital of 15.000%. Change any input above and every figure here is recalculated in your browser.

Inputs used

Operating Profit (EBIT)minimum 0
18,000,000
Effective Tax Rateaccepts 0–60 %
25 %
Invested Capitalminimum 0
90,000,000
Weighted Average Cost Of Capitalaccepts 1–30 %
11 %

Results

Return On Invested Capital
15.000%
Net Operating Profit After Tax
$13,500,000.00
Spread Over Cost Of Capital
4.000%
Economic Profit Created
$3,600,000.00

Step by step

  1. 1Values used
  2. 2ROIC and economic profit
  3. 3Return On Invested Capital= 15.000
  4. 4Net Operating Profit After Tax= 13,500,000.00
  5. 5Spread Over Cost Of Capital= 4.000
  6. 6Economic Profit Created= 3,600,000.00

Assumptions and limits

  • The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation or compounding frequency into account.
  • Figures are rounded for display to 3 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
  • Figures are estimates for planning only. Market returns are not guaranteed, and rates, limits and tax rules change. This is not financial or tax advice — speak to a qualified adviser before acting.
  • This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Figures are estimates for planning only. Market returns are not guaranteed, and rates, limits and tax rules change. This is not financial or tax advice — speak to a qualified adviser before acting.

Frequently Asked Questions

Why is ROIC better than return on equity?

ROE can be flattered by leverage. ROIC measures operating performance independently of how the business is financed.

What counts as invested capital?

Debt plus equity less cash, or equivalently net working capital plus net fixed assets — be consistent across years.

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