Return on Invested Capital (ROIC) 

Return on Invested Capital (ROIC) measures the return generated by a company on the capital invested by both shareholders and debt holders. It evaluates a company's ability to allocate capital to profitable investments and is considered one of the most reliable indicators of value creation. 

Formula: 

ROIC (%) = (Net Operating Profit After Taxes (NOPAT) / Invested Capital) × 100    

Invested capital includes equity, debt, and other long-term financing, minus cash and equivalents. A higher ROIC indicates that a business is efficiently converting invested capital into profit, ideally exceeding its cost of capital.