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ROIC VS ROA

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Anonymous
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ROIC VS ROA

What's The difference Between ROIC and ROA? Since ROIC = Net Profit/Debt+Equity and ROA = Net Profit/Asset and we know that Leverage+Equity = Assets, I dont see any difference. May anybody help-me?

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1 REPLY 1
GatorGuy
Valued Contributor

Re: ROIC VS ROA

ROA uses net income but ROIC uses earnings after taxes but before interest. 

 

Also, ROA uses assets on the BS. Many companies carry assets which actually have nothing to do with generating profits from operations.

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