# How to Calculate Return on Invested Capital (ROIC) in Xero

### Making the most of your Xero data

## What is Return on Invested Capital (ROIC)?

Return on Invested Capital (ROIC) is a financial metric that measures the profitability of a company's investments. ROIC is calculated by dividing a company's earnings before interest and taxes (EBIT) by the total value of its invested capital.

The formula for ROIC is:

ROIC = EBIT / Invested Capital

Invested Capital = Total Assets - Current Liabilities

## How do you calculate Return on Invested Capital (ROIC) in Xero?

It can be difficult to calculate Return on Invested Capital (ROIC) directly inside of Xero; that's where Causal comes in.

Causal is a modelling tool which lets you build models on top of your Xero data. You simply connect Causal to your Xero account, and then you can build formulae in Causal to calculate your Return on Invested Capital (ROIC).

## What is Causal?

Causal lets you build models effortlessly and share them with interactive, visual dashboards that everyone will understand.

In Causal, you build your models out of variables, which you can then link together in simple plain-English formulae to calculate metrics like Return on Invested Capital (ROIC). This makes your models easy to understand and quick to build, so you can spend minutes, not days, on your models.

When you're done, you can share the link to your model with stakeholders. They'll be able to view your model's outputs in a visual dashboard, rather than a jumble of tabs and complex formulae. The dashboards are interactive, letting viewers tweak your assumptions to see how they affect the model's outputs.

Causal lets you add visuals in a single click, letting you plot out graphs and distributions for metrics like Return on Invested Capital (ROIC).