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Glossary

ROIC (return on invested capital)

How much the business yields, after tax, on the money (own and borrowed) put into it.

What it is

How much the business yields, after tax, on the money (own and borrowed) put into it. Shown on the stocks pages.

How Dados B3 calculates it

EBIT × (1 − effective tax rate) ÷ average invested capital, where invested capital = gross debt + total equity − cash − financial investments. Goodwill stays in the capital. It does not exist for banks and insurers.

Example

Illustrative example, with made-up numbers to keep the arithmetic easy: EBIT of R$ 200 million, 25% effective tax and average invested capital of R$ 1.2 billion: after-tax operating profit = R$ 150 million; ROIC = 150 ÷ 1,200 = 12.5%.

What to watch for when reading it

• It only says something when compared with the cost of money (interest) and over several years.
• Above 200% the figure carries an extreme mark.
• A cyclical company (commodities) has an ROIC that rises and falls with the cycle: look at the average.

See also

• ROE (return on equity)
• ROA (return on assets)
• EBIT

Methodology · Guide · All indicators

Educational content to understand what each number means. It is not a recommendation to buy or sell.