Return On Invested Capital 5 Year Average
Returns the five-year average Return on Invested Capital (ROIC) for a company. ROIC measures how efficiently a company uses its invested capital to generate profits.
Supported Symbol Formats
| Type | Format | Example |
|---|---|---|
| US Stocks | SYMBOL | AAPL, MSFT |
Formula
ROIC = Net Operating Profit After Tax (NOPAT) / Invested Capital
Interpretation
| ROIC Level | Interpretation |
|---|---|
| > 15% | Excellent capital efficiency |
| 10-15% | Good capital efficiency |
| 5-10% | Average |
| < 5% | Poor capital efficiency |
Notes
- Returns value as a decimal (0.15 = 15%)
- Higher ROIC indicates better capital allocation
- Compare to cost of capital for value creation assessment
Syntax
=ReturnOnCapitalFiveYearAverage(Symbol)Returns
number
Five-year average ROIC as a decimal
Examples
=ReturnOnCapitalFiveYearAverage("AAPL")=ReturnOnCapitalFiveYearAverage("MSFT")=ReturnOnCapitalFiveYearAverage("WMT")Symbol from cell reference
=ReturnOnCapitalFiveYearAverage("AAPL")*100When to Use
- Assess long-term capital efficiency
- Compare companies' capital allocation
- Quality investing analysis
- Identify consistent value creators
When NOT to Use
| Scenario | Use Instead |
|---|---|
| Current ROIC | ReturnOnCapital() |
| Quarterly ROIC | ReturnOnInvestedCapitalQuarter() |
| Return on equity | ReturnOnEquityFiveYearAverage() |
| Return on assets | ReturnOnAssetsFiveYearAverage() |
Common Issues & FAQ
Why is the value less than 1?
ROIC is returned as a decimal. Multiply by 100 to get percentage (e.g., 0.15 = 15%).
What is a good ROIC?
Generally, ROIC above 15% is considered excellent. Compare to the company's cost of capital - value is created when ROIC exceeds WACC.
Why compare to cost of capital?
If ROIC > WACC (weighted average cost of capital), the company creates value. If ROIC < WACC, it destroys value.
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