What is return on invested capital (ROIC)?

The Return on Invested Capital (ROIC) measures the percentage return of profitability earned by a company using the capital contributed by equity and debt providers.

What does return of capital mean?

Return of capital refers to a company returning original investment funds back to the investor or by liquidating assets. Return on capital refers to a company’s profitability. Is Return of Capital Taxable?

What is the difference between invested capital and return on invested capital?

Invested capital refers to the combined value of equity and debt capital raised by a firm, inclusive of capital leases. Return on invested capital (ROIC) measures how well a firm uses its capital to generate profits. A company's weighted average cost of capital calculates how much invested capital costs the firm to maintain.

How do benchmarking companies calculate return on invested capital?

Benchmarking companies use the ROIC ratio to compute the value of other companies. Return on Invested Capital is calculated by taking into account the cost of the investment and the returns generated. Returns are all the earnings acquired after taxes but before interest is paid.