Quotient of adjusted EBIT and invested capital. Invested capital comprises intangible assets, tangible assets, working capital, other non-interest-bearing assets and liabilities and non-interest-bearing income tax receivables and liabilities.
Return on Invested Capital. A measure of how effectively a company uses the money (borrowed or owned) invested in its operations. Calculated by: net income after taxes / (total assets less excess cash minus non-interest-bearing liabilities).
(PAT + interest) / (Net Worth + Interest Bearing Debt - Idle Cash in hand) * 100 This ratio shows the returns that the company earns on the capital actually invested in the business.
Financial concept for Return on Investment Capital.
See Return on invested capital.
Return on invested capital. Profit as a proportion of the total capital invested in a business rather than assets shown in the balance sheet.... more on ROIC
One of the most effective metrics for holding operating managers accountable is ROIC, measured each year to focus on the after-tax earnings on the average assets employed.
Return on invested capital. Latest twelve month's net earnings divided by the most recent quarter invested capital (long-term debt plus common stock equity plus preferred equity).
Stands for return on invested capital. ROIC is solely concerned with the ability to generate returns on money invested in a business; it has no interest in the source of those funds. ROIC is calculated as follows: After-tax operating earnings / (Total assets - cash and non-interest-bearing current liabilities)