Return on Invested Capital (ROIC) is a financial metric that measures how well a company is using the money invested in it.
The formula for ROIC is:
ROIC = Net Operating Profit After Tax / Invested Capital
Net Operating Profit After Tax (NOPAT) is the amount of profit left over after all operating expenses have been paid. Invested Capital is the total amount of money invested in the company, including equity and debt.
The higher the ROIC, the better the company is using the money invested in it.