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ROIC — return on invested capital

What it measures

ROIC is the after-tax operating return a business earns on the money invested in it. The top of the fraction is NOPAT — net operating profit after tax, operating profit minus the tax on it. The bottom is invested capital: total debt plus total equity, minus cash, which is the money lenders and owners have put into the business and that the business is actually using. The Fundamentals page computes NOPAT ÷ (total debt + total equity − cash).

Why it is on the page

It is the purest answer to "does this business create value?", because it ignores how the capital was raised — debt or equity — and measures only what the operations earn on it. Compared with the cost of that capital (WACC), it tells whether growth adds value or destroys it; see ROIC against WACC and the condition summary's Value creation check.

Thresholds, their source and the population they were fitted on

The row draws no zones: the line that matters is the company's own cost of capital, which the moat panel and the Value creation check compare it with. Aswath Damodaran's January 2026 tables show how much the typical figure varies between industries — about 37% for advertising, 7% for grocery stores and 3% for car makers, against about 18% for US companies outside finance.

  • Source of the measure: Koller, Goedhart and Wessels, Valuation (McKinsey & Company).
  • Fitted on: no population — a descriptive ratio; the industry figures are Damodaran's.
  • Evidence grade: practitioner convention.

A worked example

Celestica, as the Fundamentals page showed it on 9 August 2026 (fiscal year 2025): ROIC 36.59% against a WACC of 7.91% — each unit invested earned about four and a half times what it cost.

Honeywell International, as the condition summary computed it on 25 October 2026: 22.0%, against its own five-year median of 22.5%.

What “No verdict” means here

The row carries no verdict of its own. It reads not applicable when invested capital is zero or negative — a company holding more cash than its debt and equity together — and insufficient data when the tax, debt or equity it needs is not stored.

What the verdict is and is not

The figure describes one year's operating return on the capital in use. High returns tend to fall back towards the average as competitors arrive, so one year says little about the next. It is not a forecast and not an instruction to trade the shares.