Return on capital (ROC), or return on invested capital (ROIC), is a ratio used in finance, valuation and accounting, as a measure of the profitability and value-creating potential of companies relative to the amount of capital invested by shareholders and other debtholders.[1] It indicates how effective a company is at turning capital into profits.
The ratio is calculated by dividing the after tax operating income (NOPAT) by the average book-value of the invested capital (IC).