ROIC

Return on Invested Capital

How well a company turns capital into profit.

When you'd see it: Financial analysis and capital-allocation decisions. ROIC measures how efficiently a company turns capital into profit.

Why it matters: ROIC compares the profit a company generates against all the capital it took to generate it, and a ROIC above the cost of that capital is what actually creates value. It cuts through growth that looks good but destroys value.

Common mistakes: Chasing growth without checking ROIC. Growth that earns less than its cost of capital makes the company worse off, not better.