ROIC Calculator
Estimate return on invested capital from EBIT, tax and invested capital, and compare it with your cost of capital.
Quick answer
Return on invested capital is after-tax operating profit over the capital invested: ROIC = NOPAT / invested capital, where NOPAT = EBIT x (1 - tax rate). Comparing it with WACC shows whether value is created.
ROIC Calculator
ROIC
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NOPAT
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Invested Capital
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Value Spread (ROIC − WACC)
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Economic Profit
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From EBIT to ROIC
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Assumptions & method
- NOPAT = EBIT × (1 − tax rate).
- Invested capital = total debt + shareholders' equity − cash and equivalents, unless you enter it directly.
- ROIC = NOPAT ÷ invested capital. Value spread = ROIC − WACC. Economic profit = NOPAT − WACC × invested capital.
- Uses a single point-in-time capital figure; average capital over the period would give a slightly different result.
- Not included: leases or pensions unless you add them to debt, goodwill adjustments, or any forecast of future returns.
Results are estimates based on the figures you enter. They are not guarantees and not financial advice.
Reading ROIC against the cost of capital
ROIC asks whether the core business earns more than it costs to fund it. Operating profit is taxed to give NOPAT, then divided by the capital supplied by lenders and shareholders, net of surplus cash. If that return is above the weighted average cost of capital, the business is estimated to be creating value on the capital it uses; if it is below, it is estimated to be consuming value. The result depends heavily on how invested capital is defined, so this calculator lets you build it from debt, equity and cash or enter your own figure, and then shows the spread and the economic profit it implies.