Return on Capital


ROC. A measure of how effectively a company uses the money (borrowed or owned) invested in its operations. Return on Invested Capital is equal to the following: net operating income after taxes / [total assets minus cash and investments (except in strategic alliances) minus non-interest-bearing liabilities]. If the Return on Invested Capital of a company exceeds its WACC, then the company created value. If the Return on Invested Capital is less than the WACC, then the company destroyed value.

Use Return on Capital in a sentence

You should always strive to get the highest return on capital you can so that you know you are doing things right.

​ Was this Helpful? YES  NO 9 people found this helpful.

John was responsible for calculating the return on capital for all their projects. He then reported the numbers to senior management for review.

​ Was this Helpful? YES  NO 4 people found this helpful.

Since the return on capital was much higher than anticipated over the past couple quarters, the company was demonstrating a higher than expected profitability.

​ Was this Helpful? YES  NO 11 people found this helpful.

Show more usage examples...

Browse Definitions by Letter: # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
return on average equity (ROAE) Cash Return on Capital Invested (CROCI)