Return on Invested Capital (RoIC)
Calculate the return on invested capital (ROIC), a financial ratio that measures the company’s return on the capital invested in it, including both equity and debt.
The return on invested capital is calculated by dividing the net operating profit after taxes (NOPAT) by the average invested capital. Invested capital includes both equity and debt, making this ratio a valuable measure of how efficiently a company generates returns for all of its investors.
The formula is as follows:
\[\text{Return on Invested Capital} = (\text{Net Income} - \text{Paid Dividends}) / \text{Average Invested Capital}\]Also known as: ROIC.
Return on Invested Capital (RoIC) in Python
get_return_on_invested_capital is part of the Ratios module of the open-source Finance Toolkit. Install it with:
pip install financetoolkit -U
Then call get_return_on_invested_capital as shown below.
from financetoolkit import Toolkit
toolkit = Toolkit(["AAPL", "TSLA"], api_key="FINANCIAL_MODELING_PREP_KEY")
roic_ratios = toolkit.ratios.get_return_on_invested_capital()
Which returns:
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| AAPL | 0.4143 | 0.4439 | 0.444 | 0.4336 | 0.5335 |
| TSLA | 0.1429 | 0.2733 | 0.2403 | 0.0889 | 0.0425 |
Parameters
get_return_on_invested_capital accepts the following parameters:
- dividend_adjusted (bool, optional): Whether to adjust the net operating profit after taxes with the dividends paid. Defaults to True.
- rounding (int, optional): The number of decimals to round the results to. Defaults to 4.
- growth (bool, optional): Whether to calculate the growth of the ratios. Defaults to False.
- lag (int | str, optional): The lag to use for the growth calculation. Defaults to 1.
- standardize (bool, optional): Whether to standardize (Z-Score) the result. When combined with growth=True, standardizes the growth values instead of the raw values. Defaults to False.
- trailing (int): Defines whether to select a trailing period. E.g. when selecting 4 with quarterly data, the TTM is calculated.