In response to some common questions about calculating and finding ROIC:

Q: Where's the ROIC Calculator?

A: We should have the ROIC Calculator ready soon. In the meantime, here's a short cut that isn't perfect but will work: Look at MSN Money. Click on Financial Results. Click on Key Ratios. Click on Ten Year Summary.

You will be on a page that has a bunch of ten year financial results including these two: **Return on Equity **and **Return on Assets**. (Here's a link to an earlier post definining the difference between ROIC and ROE.)

Although **neither of these is the same as ROIC, they tend to bracket ROIC** -- **ROE usually being higher than ROIC **(because debt is not included in the denominator) and **ROA being lower than ROIC** (because Assets as a denominator are often larger than equity plus debt.)

These numbers are annual, so you don't get an average return -- you'll have to look at the annual numbers and see if they are dropping or rising and if they are over 10%. And you'll also have to look at the ROIC numbers for 1 and 5 years to see if your extrapolation is in the ball park. Quite often, it will be pretty close to what you'd get with a calculator. Admittedly this is a short term fix but it will get the job done for you until we complete the calculator.

**Q: Is ROIC the same thing as ROC and ROI?**

A: Yes.

Return on Investment (ROI),**Return on Capital** **(ROC) and** **Return on Invested Capital** **(ROIC) are used interchangeably**.

If the numbers are close or the same when you compare between sites, then you're probably okay. If there's a big discrepancy between the numbers on one site (say, MSN) and the numbers on another (e.g., Morningstar), then it's worth investigating to make sure that sites are calculating ROIC correctly.

**Q: How is ROIC Calculated?**

A: Remember page 106 of Rule #1:

ROIC = NOPAT (Net Operating Profit After Tax) divided by (Equity + Debt)

**Q: Is NOPAT the same as EBITA?**

A: **NOPAT** is **not** the same as **EBITA** (Earnings Before Interest, Taxes, and Amortization & Depreciation... often called **EBITDA**). The biggest difference is taxes. NOPAT is after tax. EBITA is before tax. If you use EBITA you'll get a nicer ROIC number than what's really going on.