Return On Gross Invested Capital (ROGIC)

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Return on invested capital (ROIC) is not only the most intuitive measure of corporate performance, but it is also the best. It measures how much profit a company generates for every dollar invested in the company.

Return on gross invested capital (ROGIC) (seen in Figure 1) provides additional insights into the profitability of highly-capital intensive businesses. Depreciation policies may differ from firm to firm and can have a significant impact on both NOPAT and invested capital. ROGIC helps to minimize the impact of different depreciation policies and asset write-down policies.

Properly calculating ROIC, the primary driver of stock prices, is key to measuring a firm’s ability to generate returns on the capital invested in its business. Our Robo-Analyst technology allows us to perform the diligence needed to calculate an accurate ROIC and comparable metrics, such as ROGIC and GAAP-based ROIC.

Figure 1: How To Calculate Return on Gross Invested Capital (ROGIC)

Gross NOPAT / Average Gross Invested Capital


Gross NOPAT = (Net Operating Profit Before Tax + Depreciation and Amortization) * (1- Income Tax Rate)

Gross Invested Capital = Net Working Capital + Adjusted Fixed Assets + Accumulated Depreciation and Amortization

Sources: New Constructs, LLC

We make it easy for the average investor to leverage the benefits of a high quality ROIC model and see a clear picture of a firm’s true profitability.

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