Return on invested capital compares after-tax operating profit with debt and equity funding.
| Input | What it means |
|---|---|
| EBIT | Earnings before interest and tax, before the model applies any tax adjustment. |
| Tax Rate | The stated rate or percentage, entered using the scale and time period shown in the form. |
| Debt | Borrowing included in the ratio’s debt definition, measured on the same valuation date as equity. |
| Equity | The shareholder funding or residual ownership value used in the selected ratio. |
EBIT 100, tax 25% and debt plus equity 500 give ROIC=15%.
Compare the result with the underlying statement, budget or proposed transaction. It is most useful when every amount uses the same reporting period and the same accounting definition.
Use one consistent period for every amount and rate in the relationship. If a form specifies an annual rate or a monthly amount, follow that label rather than mixing time periods.
Only the costs and taxes represented by the inputs and formula are included. A real transaction can include other charges, so compare the estimate with the underlying agreement or statement.
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