Return on Investment Capital

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Return on Investment Capital

A measure of how efficiently a company generates cash flow compared to how much capital is invested in the company. It is calculated by taking its net operating profit after taxes and dividends and dividing by the total amount of capital invested and expressing the result as a percentage. Companies seek to have a return on investment capital greater than its cost of capital. It is also called return on invested capital and simply return on capital.
References in periodicals archive ?
These finding suggests that an increase in the ERM penetration level in organization necessarily guarantee enhancement of EVA, NOPAT, ROIC and reduction of WACC.
El presente analisis muestra que una empresa puede estar ganando dinero y destruyendo valor cuando su ROIC es positivo pero inferior al WACC.
ROIC would help to prevent a tragedy like the space shuttle Columbia disaster of 2003.
Mr Zaslow added: "However, we were swayed to maintain our outperform rating because one BG likely will improve its ROIC, as Bunge, with few exceptions, has deployed capital effectively and we estimate that Bunge will generate 15%-20% return on its investment in Moema's sugar cane mills and two we believe Bunge will not need to spend $2+ billion required for fertilizer projects whose return is uncertain at best.
This reflects our on-going process of optimizing our portfolio based on our stringent ROIC guidelines.
The end-result is often lower utilization and ROIC for EMS companies.
ROIC is calculated by dividing the company's after-tax net operating profits by the sum of working capital and fixed assets.