Return On Investment Capital (ROIC)

Formal

A simple percentage comparison between the profits generated by a business and the Investment Capital (Shares and Loans) needed to generate that profit. Eg I have £1 Million investment in a business and make £100,000 profits per annum = 10% Return On Investment Capital.

Real-world Example

A company generates $600k in after-tax operating profit from $3M of invested capital (debt plus equity) - an ROIC of 20%, a measure often used to judge whether a company is creating value above its cost of capital.