The Return On Invested Capital (ROIC)
return on invested capital or roic is a fundamental method of determining a company's financial performance. it is used to measure how well a company is investing its capital. roic is calculated as net income minus dividends divided by invested capital. roic is often considered an accurate picture of a company's performance, since it looks at how a company uses the capital that has been invested in it by stock holders and bond holders to earn additional income. be aware that roic does not specify which investments are actually generating the return. it only looks at the total investment capital returns. wising incorporated reports annual net income of $40,000 in a given year. if it has $80,000 in total debt and $120,000 in shareholder equity, its total capital is $200,000. assuming wising pays no dividends and always debt is funded through corporate bonds issued to investors, its roic will be $40,000 divided by $200,000 equals 20%. this means that for every $1 invested in it, wising generates $0.2 in income. an advantage of viewing a company's roic is that it provides investors an overview of a company's management performance. when a company consistently shows a high roic, it is considered a good investment and its shares tend to trade at a higher market price. there are also some disadvantages. roic is an accounting measurement and those numbers can be skewed by company management. investment numbers can also be influenced by different account practices and global currency fluctuation and inflation rates can impact the amount shown as the roic.
- return on invested capital（roic）・・・投下資本利益率