Sales and profit
ROIC (Return on Invested Capital)
Return on invested capital: how much profit the business itself makes, after taxes, for each $1 that shareholders and lenders have put into it. For example, a lemonade stand started with $100 of savings and loans that makes $15 a year from selling lemonade has a ROIC of 15%.
Why does it matter?
It shows how effectively a company turns the money put into it into profit from its day-to-day operations.
How do I read it?
Compare it with the company's past and with similar companies. It is less meaningful for banks and insurers, whose debt is part of their business. One unusual year, such as a big one-time charge, can move it a lot.
How StockLab calculates it
Operating income after tax ÷ average invested capital (debt + shareholders' equity). Tax uses the company's own rate, or 21% when that can't be measured.
Example
$16 million of after-tax operating profit on $200 million of invested capital (debt plus equity) is an 8% ROIC.
On StockLab
It is the first card in the Advanced View of every company page.