Returns
ROIC — Return on Invested Capital
After-tax operating profit divided by total invested capital.
Definition
ROIC measures how efficiently the company turns the capital invested in it (equity plus debt) into after-tax operating profit. It's the single most important measure of business quality for non-financial companies.
Formula
NOPAT ÷ (Equity + Long-Term Debt) × 100, where NOPAT is operating profit × (1 − tax rate)
Why it matters
A business that earns ROIC above its cost of capital creates value with every dollar reinvested; one that earns below destroys value. Sustained high ROIC (15%+) over many years is the fingerprint of a great business.
How Standard Equity uses it
Shown in the main table and the header. The SE Grade sets it against the cost of capital (WACC) and checks how many of the last 10 years it cleared fixed hurdles, then holds the moat back when its recent average return ranks low among comparable companies (high returns are normal in some industries). Not used for banks, insurers or broker-dealers: banks show ROTE in its place, and the SE Grade uses ROE.
The metric
| Category | Returns |
|---|---|
| Unit | % |