Generally speaking, your return on invested capital, or ROIC, refers to the profits you receive relative to the money you’ve invested. For example, if you spent $100,000 to start a business and you earned $20,000 in after-tax profit over the first year, your return on investment would be 20%. It’s also important to take debt into account, if applicable, as debt is also a form of capital used to fund a business’ operations.
The general formula for calculating ROIC is: