Roic Finance Term
Understanding Return on Invested Capital (ROIC)
Return on Invested Capital (ROIC) is a powerful financial metric that reveals how effectively a company is using its capital to generate profits. Unlike simpler profitability measures like net profit margin, ROIC focuses on the actual capital deployed by the company, providing a more insightful view of management’s ability to create value for investors. It essentially answers the question: “For every dollar invested in the business, how much profit is generated?”