## About Return On Invested Capital Calculator (Formula)

A Return on Invested Capital (ROIC) Calculator is a tool used to compute the efficiency of a company’s capital utilization by comparing its operating income to the total invested capital. This calculator is essential in financial analysis to assess how effectively a company generates profits from the capital invested in its operations.

The formula for calculating ROIC involves the company’s operating income and the total invested capital:

**ROIC = Operating Income / Total Invested Capital**

Where:

- ROIC is the return on invested capital, expressed as a percentage.
- Operating Income is the company’s earnings before interest and taxes (EBIT).
- Total Invested Capital represents the sum of equity and debt used to finance the company’s operations.

To use the ROIC Calculator formula, follow these steps:

- Determine the company’s operating income (EBIT), which is a measure of its profitability.
- Calculate the total invested capital by adding the company’s equity and debt.
- Plug the values of operating income and total invested capital into the formula: ROIC = Operating Income / Total Invested Capital.
- Calculate the ROIC as a percentage. The result indicates how effectively the company is generating returns on the capital invested.

ROIC calculations are important for evaluating a company’s ability to generate profits relative to the capital employed. A higher ROIC suggests efficient capital allocation and strong financial performance.

Keep in mind that ROIC should be compared to the company’s cost of capital to assess whether investments are generating returns higher than the cost of obtaining the capital.