hi all ,
i am new investor i am learning and make good foundation for selecting buisness .
i wanted to know how can i calculate roic (return on invested capital) from the annual reports
i know the formula ROIC= NOPAT / (EQUITY+DEBT)
but whenever i am reading and calcuating i am getting confused the numbers which i found is very diffrent from the numbers shown in various tool
i am considering the total equity + liabilties becuase the reports were in such manner
ROIC – Represents the % of ‘Invested Capital’ earned as profit in a specific year.
Total capital for a business is the sum of all the liabilities, including shareholder’s equity and is invested to acquire various assets, both operating and non-operating. Certain types of assets such as cash including bank balances and long-term investments are not needed immediately for the operations & invested to buy financial products say mutual funds/FD.
I think your question is – How to calculate ‘Invested Capital’?.
If yes, you have to use the both sides of the balance sheet. Out of total assets subtract the non-operating assets such as cash, must read the accounting notes to conclude, and Non-Interest bearing liabilities such as Trade Payables to arrive at the amount of the ‘Invested Capital’.
Trust that helps.
thanks surender
i will give a try 
Invested capital is simply Fixed assets + Working capital.
The formula you wrote is ROCE (return on capital employed)
When you take Debt + Equity the problem is alot of non core assets are also a part of this calculation. So for example take Bajaj Auto here if you see ROCE you will not understand the true return ratio of the business as alot of money is invested in mutual funds. In such businesses you see ROIC.
I’m also struggling with the same problem.
Roic calucation becomes very tricky and as investors we want to calculate roic as precisely as possible.
Found some resources really helpful. I’m still in the process of learning.
