Return on invested capital
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ROIC is expressed as a percentage and often confused with Return on Capital.
Return on Invested Capital is a non-GAAP financial measure that quantifies how well a company generates cash flow relative to the capital it has invested in its business. In order to create value, a firm must earn an ROIC that is higher than its capital cost.
ROIC = Net Operating Profit After Taxes / Invested Capital
..where
Net Operating Profit After Taxes = EBIT + amortization + tax adjustment
Net Income may also be calculated as: Net Income = Net Income+(Interest Expense*(1-Tax rate))
Net Operating Assets = Current assets + Net Property Plant & Equipment - Cash (many will calculate ROIC with and without cash to assess the drag on operational returns.)
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