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Term explained · Cash flow and debt

What is ROIC? Return on invested capital, with real US companies

ROIC compares after-tax operating profit with the capital a company runs on. The formulas, where it sits in a 10-K, and real US examples.

By · Checked against filings: , 1 min read, Seen in 3 companies on Cityfort. Editorial policy. Corrections

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What is return on invested capital (ROIC)?

Return on invested capital (ROIC) is a percentage. It compares operating profit, after an estimate of tax, with the capital a company runs on. That is mostly debt and shareholders' equity.[S4]

It is not a GAAP figure (GAAP is the US accounting rules). Each company picks its own formula.[S4][S5]

How is ROIC worked out?

The usual shape is ROIC = NOPAT ÷ average invested capital. NOPAT, net operating profit after tax, is operating income minus an estimated tax on it.[S4]

Three companies on Cityfort use three versions:

  • Home Depot divides NOPAT by average long-term debt and equity.[S4] Its ROIC was 25.7% (FY2025).
  • Lowe's adds lease interest to the profit and lease liabilities to the debt.[S5] Its ROIC was 26.1% (FY2025).
  • Nike counts lease liabilities as debt, then subtracts cash and short-term investments.[S6] Its ROIC was 18.7% (FY2026).

Where do you find ROIC in a 10-K or 10-Q?

Look in MD&A, Management's Discussion and Analysis: Item 7 of a 10-K.[S7] All three companies show their calculation there.[S4][S5][S6] Home Depot repeats it in its 10-Q, Part I, Item 2.[S8]

A filing with a non-GAAP measure must show the closest GAAP figure, at least as prominently, with a reconciliation.[S2] For a ratio, SEC staff expect the same ratio worked out from GAAP figures too.[S3]

What does ROIC leave out?

  • Interest. The profit is counted before interest on debt.[S4]
  • The tax line itself. The tax is a calculation: operating income times the effective tax rate.[S4]
  • A shared definition. Lowe's says "numerous methods exist for calculating ROIC."[S5]

How does Cityfort show ROIC?

Each row below is the company's own figure, so the rows are not like for like. Its note names the measure and the GAAP figure the stock page puts beside it. See non-GAAP measures.

See it in real companies

Return on invested capital (ROIC), as the company measures it at companies on Cityfort

3 companies on Cityfort, listed A–Z (not ranked).

Home Depot
25.7%FY2025 · Return on invested capital (ROIC), the company's own measure; nearest GAAP figure: Net income per $100 of net sales, FY2025, 8.6% · source S1
Lowe's
26.1%FY2025 · Return on invested capital (ROIC), the company's own measure; nearest GAAP figure: Net earnings ÷ average debt and shareholders' deficit, FY2025, 22.1% · source S1
Nike
18.7%FY2026 · Return on invested capital, the company's own measure; nearest GAAP figure: Net income as a share of revenue, FY2026, 6.7% · source S1

From each company's filings, as cited on its Cityfort stock page. These figures change when a stock page is updated.

Questions people ask

Is ROIC a GAAP measure?
No. Home Depot and Nike both call it a non-GAAP measure. Under Regulation G, a ratio built only from GAAP figures is not non-GAAP. ROIC's profit figure is the company's own calculation.[S1][S4][S6]
What is the second ratio beside Lowe's ROIC?
Lowe's shows net earnings divided by its average debt and shareholders' deficit. SEC staff say a ratio built on a non-GAAP measure should come with the same ratio from GAAP figures, at least as prominently.[S5][S3]
Can one company's ROIC be compared with another's?
Not directly. Lowe's says its method may differ from other companies' methods. Nike subtracts cash and short-term investments from its invested capital; Home Depot does not.[S5][S4][S6]
How is the tax in NOPAT worked out?
It is a calculation, not the income tax line. Home Depot multiplies operating income by its effective tax rate for the last 12 months. Nike multiplies EBIT, earnings before interest and taxes, by its effective tax rate.[S4][S6]

Sources

  1. S117 CFR 244.101 (Regulation G): definition of a non-GAAP financial measure, paragraphs (a)(1) and (a)(2) (eCFR, accessed Nov 6, 2026) · Electronic Code of Federal Regulations (eCFR)Tier 1: company or exchange filing · Nov 6, 2026
  2. S217 CFR 229.10(e) (Regulation S-K Item 10(e)): use of non-GAAP financial measures in Commission filings (eCFR, accessed Nov 6, 2026) · Electronic Code of Federal Regulations (eCFR)Tier 1: company or exchange filing · Nov 6, 2026
  3. S3Non-GAAP Financial Measures: Corporation Finance Interpretations, Question 102.10(a) (ratios with a non-GAAP numerator or denominator), last updated Dec 13, 2022 · U.S. Securities and Exchange Commission, Division of Corporation FinanceTier 1: company or exchange filing · Dec 13, 2022
  4. S4The Home Depot, Inc.: Form 10-K for fiscal 2025 (year ended Feb 1, 2026), Item 7, Non-GAAP Financial Measures, Return on Invested Capital · The Home Depot, Inc. (SEC EDGAR)Tier 1: company or exchange filing · Mar 18, 2026
  5. S5Lowe's Companies, Inc.: Form 10-K for fiscal 2025 (year ended Jan 30, 2026), Item 7, Return on Invested Capital and its calculation · Lowe's Companies, Inc. (SEC EDGAR)Tier 1: company or exchange filing · Mar 23, 2026
  6. S6NIKE, Inc.: Form 10-K for fiscal 2026 (year ended May 31, 2026), Item 7, Use of Non-GAAP Financial Measures, Return on Invested Capital · NIKE, Inc. (SEC EDGAR)Tier 1: company or exchange filing · Jul 15, 2026
  7. S7Investor Bulletin: How to Read a 10-K, September 2011 (Item 7, Management's Discussion and Analysis) · U.S. Securities and Exchange Commission, Office of Investor Education and AdvocacyTier 1: company or exchange filing · Sep 1, 2011
  8. S8The Home Depot, Inc.: Form 10-Q for Q2 fiscal 2026 (quarter ended Aug 2, 2026), Part I, Item 2, Return on Invested Capital · The Home Depot, Inc. (SEC EDGAR)Tier 1: company or exchange filing · Aug 25, 2026

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