Return on Capital. 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.
