Return on Invested Capital (ROIC)

Return on Invested Capital, or ROIC, measures how efficiently a company turns the money invested in it into profit. Market Lens uses a simplified version — Net Income divided by (Total Equity plus Total Debt) — rather than the textbook NOPAT-based formula, using shareholders’ equity directly when it’s available and deliberately leaving cash in the denominator — subtracting it would inflate the figure for cash-rich firms. A consistently high ROIC — comfortably above what it costs the company to raise money — is one of the strongest signals of a durable economic moat.