return on invested capital (ROIC)

A profitability ratio that considers how much profit a company earns from long-term sources of capital funding. Invested capital can be provided by both bondholders and shareholders. ROIC is calculated as operating earnings divided by invested capital. Operating earnings are earnings before interest and taxes (EBIT). Invested capital is net working capital and net fixed tangible assets. Like return on assets (ROA) and return on equity (ROE), ROIC is influenced by how capital intensive a company is.