How to calculate ROIC. Calculating return on invested capital requires you to dig into a company's financial statements. ROIC is calculated with a simple formula: (Net Operating Profit After Taxes) / (Total Capital Invested).
If you're looking for a multi-bagger, there's a few things to keep an eye out for. Ideally, a business will show two important characteristics: high ROIC and consistent growth in ROIC over time. These factors indicate a company's ability to generate profitable returns on the capital invested.
If you're looking for a multi-bagger, there's a few things to keep an eye out for. In a perfect world, we'd like to see a company with a high ROIC that is also increasing over time. This combination suggests that the company is not only generating strong returns on its invested capital but also improving its efficiency and profitability.