# Return on Capital

The profit each unit of capital in use earns, as a median over the window.

## Definition

Each year's profit divided by the average capital in use, and the median of those years. It is a level, so it is defined for every company with statements. It is the same basis as ROIC in the main table, taken as a median so one odd year does not set the number.

## Formula

median over up to 10 years of (NOPAT ÷ average invested capital)

## Why it matters

A company can only compound as fast as the return on the capital it puts back. Read it with the reinvestment rate beside it: a high rate at a high return is how a company compounds.

## How Standard Equity uses it

The median over up to the last ten years the statements have, at least three. General companies use NOPAT and invested capital; REITs use FFO and property, plant and equipment; banks, insurers and companies with a captive finance arm use net income and common book equity (total equity less preferred shares and minority interests). Each Trend bar is one year's return.

## The metric

| Category | Breakdown Tables |
| -------- | ---------------- |
| Unit     | %                |

[← Back to glossary](https://standard-equity.report/glossary)