Return on Invested Capital (ROIC)
NOPAT divided by invested capital.
ROIC measures how effectively a company deploys its total invested capital (equity plus debt minus cash) to generate operating returns. It strips out capital structure effects by using NOPAT (net operating profit after tax). ROIC above the cost of capital indicates value creation.
Formula
Related Terms
Return on Equity (ROE)
Net income divided by shareholders' equity — the return to equity investors.
Return on Assets (ROA)
Net income divided by total assets.
Market Capitalization
Share price multiplied by shares outstanding — the total equity value.
Enterprise Value (EV)
Market cap plus net debt — the total acquisition value of the business.
P/E Ratio
Share price divided by earnings per share — how much you pay per dollar of profit.
EV/EBITDA
Enterprise value divided by EBITDA — a capital-structure-neutral valuation metric.