Return on Invested Capital (RIOC) is EBIT divided by the sum of Average Debt + LTM Equity (not average Equity per Rosenbaum). Average Debt is LTM Debt plus the prior years debt divided by 2. Recall that Debt less Cash and Cash Equivalent. Suppose Acme Tiles has LTM Debt of $125M and debt a year prior of $115M, balance sheet Equity of $70M, LTM EBITDA of $40M and LTM EBIT of $35M.

1. Compute ROIC.