# Return on Invested Capital

*Accounting & Reporting — Finicade finance glossary*

ROIC measures after-tax operating profit against the capital actually invested in the business, debt and equity together. It's the number that matters most for long-term value creation: a company earning ROIC above its cost of capital creates value with every dollar it reinvests, and one earning below destroys value while still reporting a profit. The spread between ROIC and WACC is the whole game.

**Formula:** `ROIC = NOPAT ÷ (Debt + Equity − Cash)`

**Also known as:** ROIC, return on capital employed, ROCE

**Related terms:** [WACC](https://finicade.com/glossary/wacc), [Return on Assets](https://finicade.com/glossary/return-on-assets), [Return on Equity (ROE)](https://finicade.com/glossary/roe), [Economic Value Added](https://finicade.com/glossary/economic-value-added), [Moat](https://finicade.com/glossary/moat)

Source: https://finicade.com/glossary/return-on-invested-capital