Invested capital
Definition · Level 10 · Valuation
Keep reading with Tradecraft
Without a subscription, you can read three definitions every 30 days. Tradecraft explains all 988 terms and strategies, with the lessons that teach them, flashcards that come back before you forget, quizzes and a payoff lab.
The money lenders and shareholders have put into the operating business, commonly debt + equity − cash. The bottom of the ROIC fraction.
Example
Brewline: 400 + 380 − 100 = 680.
Where Tradecraft teaches it
Level 10 · Valuation, in the lesson “Returns on capital: ROE, ROA and ROIC”: How much profit each dollar of equity, assets and capital earns, what DuPont reveals, and when growth creates value.
Related terms
- DuPontSplitting ROE into net margin × asset turnover × equity multiplier, to show whether returns come from profitability, efficiency or leverage.
- NOPATNet operating profit after tax: earnings before interest and taxes (EBIT) × (1 − tax rate).
- ROAReturn on assets: net income ÷ total assets, the profit the entire asset base generates.
- ROEReturn on equity: net income ÷ shareholders’ equity, the return earned on the owners’ book capital.
- ROICReturn on invested capital: after-tax operating profit (NOPAT) ÷ the capital supplied by lenders and shareholders.
- 10-K / 10-Q / 8-KFilings with the US Securities and Exchange Commission: the audited annual report, the unaudited quarterly report, and the current report for…