ROIC Calculation Instructions To get started you will need the firms income statements and balance sheets for several years as well as their pro forma statements. In order to calculate the Return on Invested Capital (ROIC) follow the following steps: Step 1. Divide the Cost of goods Sold for each year by that years Sales. Make the same calculation for Depreciation Expenses and the expenses associated with Sales General, and Administrative outlays. Step 2. Calculate the averages and standard deviations for each of the categories calculated in Step 1. Step 3. Calculate the differences between the ratios you calculated in Step 1 from your pro forma, or budgeted, ratios. Step 4. Subtract the sum you calculated in Step 1 from one (1). This calculation provides the EBIT divided by sales. Step 5. Calculate the difference between your calculated EBIT per sales dollar and the pro forma or budgeted ratio. Step 6. Divide the Net Operating Capital, Net Plant, Property, and Equipment, and Other Assets data by Sales. Step 7. Divide the sum of the three ratios calculated in Step 6 into one, obtaining the ratio of Sales to Net Invested Capital.. Step 8. Calculate the difference between the Sales to Net Invested Capital, Step 7s calculation, and your pro forma, or budgeted, ratio. Step 9. Multiply the EBIT per Sales dollar by the Sales/ Net Invested Capital ratio. The product of these two ratios is the Pretax ROIC. Step 10. Calculate the difference between the Pretax ROIC and your pro forma, or budgeted ratio. Step 11. Calculate the Marginal Tax Rate by dividing the total income taxes paid during the fiscal period by that periods net income. Step 12. Calculate the difference between the Marginal Tax Rate, calculated in Step 11, and your pro forma, or budgeted rate. Step 13. Subtract the Marginal Tax Rate calculated in Step 11 from one (1). Step 14. Multiply the Pretax ROIC calculated in Step 9 by the difference obtained by Step 13. This provides the After-tax ROIC. Step 15. Calculate the difference between the After-tax ROIC calculated in Step 14 with your pro forma, or budgeted After-tax ROIC.