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Return on Invested Capital (ROIC)

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Dave Cleveland
This article is part of WikiProject Definitions. Consider editing to improve it. View articles referencing this definition.

Return on Invested Capital (ROIC) is used to judge how well companies generate earnings from capital invested in their business. It is essentially the return a company earns on each dollar invests in itself. ROIC is defined as Net Operating Profits Less Adjusted Taxes (NOPLAT) divided by the sum of Working Capital and fixed assets. Return on capital invested is a key driver of a business value (the higher it is, the higher the value) as it represents the return a company earns on its projects relative to its cost of capital.

ROIC = NOPLAT ÷ (Working Capital + Fixed Assets)


- Or -


ROIC = (EBIT * (1-T)) ÷ (Working Capital + Fixed Assets)


When a company's return on invested capital is greater than their cost of capital (commonly measured as the weighted average cost of capital, or WACC) they are creating value by investing in their projects. When this is not the case and company's WACC is greater than their ROIC they are said to be destroying value by investing capital in their business.

Retrieved from "http://www.wikinvest.com/metric/Return_on_Invested_Capital_(ROIC)"

Return on Invested Capital (ROIC)

Company20042005200620072008
American Express Company (AXP) AddAddAddAddAdd
AutoZone (AZO) AddAddAddAddAdd
Burlington Northern Santa Fe (BNI) 7.910.111.4AddAdd
Canadian National Railway Company (CNI) 7.39410.2AddAdd
Canadian Pacific Railway (CP) AddAddAddAddAdd
Celestica (CLS) AddAddAddAddAdd
CSX (CSX) 4.744439811.040373911.6143468AddAdd
Eli Lilly and Company (LLY) AddAddAddAddAdd
Genesee & Wyoming (GWR) 9.92771629.585950425.6777628AddAdd
GlaxoSmithKline (GSK) AddAddAddAddAdd
Google (GOOG) AddAddAddAddAdd
Guangshen Railway Company (GSH) AddAddAddAddAdd
Ingersoll-Rand Company (IR) AddAddAddAddAdd
Kansas City Southern (KSU) 2.95846167.54169186.8498747AddAdd
Lockheed Martin (LMT) AddAddAddAddAdd
Medtronic (MDT) AddAddAddAddAdd
Norfolk Southern (NSC) 8.479916410.412660411.0740569AddAdd
Pike Electric (PEC) AddAddAddAddAdd
Providence and Worcester Railroad Company (PWX) 1.46128681.74693241.4836014AddAdd
Scholastic (SCHL) AddAddAddAddAdd
Union Pacific (UNP) 4.76.48.2AddAdd
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