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Return on Invested Capital (ROIC) Calculator

Calculate the return on investment for a business location or capital project to evaluate financial performance.

ROIC Calculator

Name of the location or project you're analyzing

$

Expected annual profit when operating at full capacity

$

Total capital invested to launch this location or project

Understanding ROIC

Return on Invested Capital (ROIC) measures the return that a business generates from the capital invested in it. It shows how efficiently a company uses its capital to generate profits.

Formula:

ROIC = (Annual Profit at Capacity / Total Investment to Launch Location) × 100%

Why this metric matters:

  • Helps evaluate the efficiency of capital allocation
  • Compares performance across different locations or projects
  • Provides a benchmark for future investment decisions
  • Shows if a business is creating or destroying value
  • Aids in prioritizing expansion opportunities

Typical ROIC benchmarks:

Cost of Capital

7-10%

Average Market

10-15%

Good Performance

15-25%

Excellent

>25%

Tech Companies

15-30%

Retail

10-20%

Note: This calculation uses a simplified approach for business locations or projects. For a more comprehensive corporate ROIC, you would use NOPAT (Net Operating Profit After Tax) and include all invested capital in the business.

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