# How to Calculate Return on Invested Capital in Redshift

### Making the most of your Redshift data

## What is Return on Invested Capital?

Return on Invested Capital (ROIC) is a measure of how well a company is using the money it has invested to create revenue.

It is calculated by dividing a company's operating income by its invested capital.

Invested capital is the sum of a company's total debt and equity, minus its cash.

For example, if a company has $10 million in debt and $15 million in equity, and $5 million in cash, its invested capital is $20 million.

For a company to calculate its ROIC, it must first calculate its operating income. Operating income is the amount of money a company makes from its core business activities, before taking into account interest, taxes, depreciation and amortization.

If a company has $100 million in revenue and $50 million in operating income, its ROIC is 20%.

A company's ROIC is a good indicator of how well it's using its capital to generate revenue. If a company has a ROIC of less than 10%, it's not doing a good job of using its capital to generate revenue.

## How do you calculate Return on Invested Capital in Redshift?

It can be difficult to calculate Return on Invested Capital directly inside of Redshift; that's where Causal comes in.

Causal is a modelling tool which lets you build models on top of your Redshift data. You simply connect Causal to your Redshift account, and then you can build formulae in Causal to calculate your Return on Invested Capital.

## What is Causal?

Causal lets you build models effortlessly and share them with interactive, visual dashboards that everyone will understand.

In Causal, you build your models out of variables, which you can then link together in simple plain-English formulae to calculate metrics like Return on Invested Capital. This makes your models easy to understand and quick to build, so you can spend minutes, not days, on your models.

When you're done, you can share the link to your model with stakeholders. They'll be able to view your model's outputs in a visual dashboard, rather than a jumble of tabs and complex formulae. The dashboards are interactive, letting viewers tweak your assumptions to see how they affect the model's outputs.

Causal lets you add visuals in a single click, letting you plot out graphs and distributions for metrics like Return on Invested Capital.