Return on Invested Capital (ROIC) is the profitability or performance ratio that measures how much investors earn on the capital they have invested.
In short, the ROIC calculates how much money a company earns for every dollar they invest.
A company with an ROIC of 50%, generates $.50 for every $1 they invest.
A real life example:
Microsoft (MSFT) has an ROIC of 23.05%, therefore every $1 that Microsoft invests they generate $.23
Don’t get too tied up in learning how to calculate the ROIC. These calculations can be found on any decent financial website.
I use Morningstar:
Simply type in the symbol you’re looking for.
Then click on “Key Ratios”
Scroll all the way down to the bottom and there you have it!