Finance glossary
Return on Invested Capital (ROIC)
Definition
How efficiently a company turns capital into profit.
ROIC measures the after-tax operating profit a company generates per dollar of debt and equity invested. When ROIC consistently exceeds the cost of capital, the business creates value. It is a favorite metric for judging the quality of a company economics.
In a sentence
A high Return on Invested Capital (ROIC) year after year showed the business turned every dollar of capital into outsized profit.
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