Return on Capital (ROC)

Difficulty: Advanced

Return on capital (ROC) is after tax rate of return on net business assets. ROIC is unaffected by changes in interest rates or company's debt and equity structure. It measures business productivity performance.


Return on Invested Capital (ROIC)

Automatic Data Processing Inc., ROIC calculation

 
Jun 30, 2017 Jun 30, 2016 Jun 30, 2015 Jun 30, 2014 Jun 30, 2013 Jun 30, 2012
Selected Financial Data (USD $ in thousands)
Net operating profit after taxes (NOPAT)1 1,775,941  1,532,229  1,297,055  1,453,072  1,372,588  1,334,235 
Invested capital2 7,519,836  7,921,908  6,104,700  8,331,374  7,711,953  7,494,400 
Ratio
ROIC3 23.62% 19.34% 21.25% 17.44% 17.80% 17.80%

Source: Based on data from Automatic Data Processing Inc. Annual Reports

2017 Calculations

1 NOPAT. See Details »

2 Invested capital. See Details »

3 ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 1,775,941 ÷ 7,519,836 = 23.62%

Ratio Description The company
ROIC A measure of the periodic, after tax, cash-on-cash yield earned in the business. Automatic Data Processing Inc.'s ROIC deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 level.

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