Free Engineering Workbench calculator
Return on capital (ROIC and ROE)
Check each year whether the business earns more than its cost of capital.
Finance & unit economicsHow it's worked out
- ROIC = EBIT × (1 − tax) ÷ invested capital. ROE = net profit ÷ average equity. Economic profit = NOPAT − invested capital × WACC
- Invested capital averaged over the year
NoteA positive spread over the cost of capital means growth creates value. A negative one means growth destroys it.
Source: McKinsey, Valuation (Koller et al.)
Need help acting on this number?
VVnT SeQuor's our services practice helps teams turn this metric into a plan.