Incremental Return on Invested Capital (ROIIC)
When a company deploys new capital, what return does it earn?
Definition
ROIIC measures the return on incremental capital deployed — the change in NOPAT divided by the change in IC. It reveals whether recent investments are creating or destroying value.
Formula
Where
A negative
Interpretation
| Range | Assessment |
|---|---|
| > 15% | Excellent — new investments are highly productive |
| 10% – 15% | Good — investments earn adequate returns |
| < 10% | Marginal — new capital earns below average returns |
| < 0% | Destructive — recent investments are losing money |
In Finsco
Computed by the audit returns command. The lookback period is configurable via --lag (default: 3 years).
audit returns --lag 5
Related Metrics
- ROIC — average return on all invested capital
- CapEx Intensity — how much OCF goes to capital expenditure