ROIC Calculator – Return on Invested Capital
Return On Invested Capital Calculator
Return On Invested Capital (%) is equal to Net operating profit after tax (INR) divided to invested capital. And Return On invested Capital equal to Earnings before interest (INR) and taxes (%) multiple 1 number of value less than tax rate (%) divided to debt (INR) added equity(INR).
Formula us,
ROIC = NOPAT / invested capital
or
ROIC = [EBIT * (1 – tax rate)] / (debt + equity)
Let us consider,
- NOPAT – net operating profit after tax. It can be calculated from EBIT (earnings before interest and taxes) with the following equation:NOPAT = EBIT * (1 – tax rate)
- Invested capital – a sum of all debt and equity on the balance sheet of a company.
calculate the ROIC
EBIT ($ 100) , tax rate (0.15)
- NOPAT = EBIT * (1 – tax rate)NOPAT = $100 * (1 – 0.15)The answer is NOPAT = $85
NOPAT (85) , invested capital (100.5)
ROIC = NOPAT / invested capital
ROIC = $85 / $100.5
The answer is ROIC= 45.8%