This calculator provides the user with the ability to calculate a company's return on invested capital, or ROIC. The calculator requires inputs from the income statement and balance sheet to compute the company's net income, net operating profit after taxes, invested capital, and return on invested capital.
Calculator Definitions
The variables used in our online calculator are defined in detail below, including how to interpret the results.
Earnings before Interest and Taxes ($)
Found on the income statement, the earnings before interest and taxes (EBIT) measures a company's profit, excluding both interest and income tax expenses.
Interest Expense ($)
Found on the income statement, the interest expense is the payments that have come due on amounts borrowed by the company. Current Assets ($) Found on the balance sheet, current assets are generally defined as cash and other assets that can be converted into cash within one year or one operating cycle, whichever is longer.
Cash ($)
Found on the balance sheet, cash includes paper money, coins, checks, money orders, and money on deposit with banks.
Fixed Assets ($)
Found on the balance sheet, fixed assets, also known as non-current assets, or as property, plant, and equipment (PP&E), is a term used for assets and property which are not readily converted into cash.
Current Liabilities ($)
Found on the balance sheet, current liabilities are generally defined as any debts that must be paid within one year or one operating cycle, whichever is longer.
Income Tax Rate (%)
This is the company's income tax rate; generally, 40% is used for large corporations.
After Tax Cost of Capital (%)
This is the company's after tax cost of capital. Our cost of capital calculator can be used to determine this value. The calculation of ROIC does not require this input, only the determination of excess returns.
Net Income ($)
Found on the income statement, net Income is a measure of a company's profitability. It is calculated as (EBIT - Interest Expense) x (1 - Tax Rate).
Net Operating Profit after Taxes (NOPAT) ($)
The net operating profit after taxes is calculated as Net Income + Interest Expense x (1 - Tax Rate).
Non Cash Working Capital ($)
A company's non-cash working capital can be found by taking the current assets and subtracting current liabilities and cash.
Invested Capital ($)
The value for invested capital is equal to the fixed assets plus the non-cash working capital.
Return on Invested Capital (%)
The formula for return on invested capital, or ROIC, is net operating profit after taxes divided by invested capital.
Excess Returns (%)
Comparing a company's ROIC to its after-tax weighted average cost of capital tells us how much excess returns the company generates from its investments.
Return on Invested Capital (ROIC) Calculator
Disclaimer: These online calculators are made available and meant to be used as a screening tool for the investor. The accuracy of these calculations is not guaranteed nor is its applicability to your individual circumstances. You should always obtain personal advice from qualified professionals.
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