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Glossary

Return on Invested Capital

Also: ROIC

Essential — core valuation theory

What it measures

The cleanest measure of operating efficiency. Paired with WACC = value creation test.

Formula

NOPLAT / Invested Capital

Benchmark

> 15% strong · compare to WACC

Related metrics

WACCROIC − WACC SpreadNOPLATROE

Source

McKinsey, Valuation (7th ed.) ch. 5

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