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Calculate return on invested capital (ROIC) online.

Return on Invested Capital Calculator

WACC % Historical Data

The historical data trend for ‘s WACC % can be seen below:

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  • For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
  • For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company’s associated stock exchange currency.

Return on invested capital (ROIC) formula

ROIC = (Net operating profit – Adjusted taxes) / Invested Capital x 100

The ROIC formula is calculated by assessing the value in the denominator, total capital, which is the sum of a company’s debt and equity.

What is Return on Invested Capital?

Both investors and company management use this formula to measure how well the company is managed and how efficiently its capital is utilized.

Comparing a company’s return on invested capital with its weighted average cost of capital (WACC) reveals whether invested capital is being used effectively. This measure is also known simply as “return on capital.”

ROIC vs WACC

Since WACC (Weighted Average Cost of Capital) is the minimum expected return a capital provided would usually demand, the difference between the Return On Invested Capital and WACC is the “excess return” or the “economic profit” realized by an investing agent. The ROIC percentage should be greater than the WACC percentage in order for the firm to be generating capital and adding value for its investors.

Comparing a company’s return on invested capital with its weighted average cost of capital (WACC) reveals whether invested capital is being used effectively.

Example of How to Use Return on Invested Capital

As a historical example, let’s consider Target Corporation’s (TGT) fourth-quarter 2018 earnings release. The company calculated its trailing 12-month month ROIC for that year, showing the components that went into the calculation:

Target Corp. FY 2018 ROIC Calculation
(All values in millions of U.S. dollars)TTM 2/3/18TTM 1/28/17
Earnings from continuing operations before interest expense and income taxes4,3124,969
+ Operating lease interest *8071
– Income taxes8641,648
Net operating profit after taxes3,5283,392
   
Current portion of long-term debt and other borrowings2701,718
+ Noncurrent portion of long-term debt11,31711,031
+ Shareholders’ equity11,70910,953
+ Capitalized operating lease obligations *1,3391,187
– Cash and cash equivalents2,6432,512
– Net assets of discontinued operations262
Invested capital21,99022,315
Average invested capital22,15222,608
   
After-tax return on invested capital15.9%15.0%

Target Corp. FY 2018 ROIC Calculation

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