# Return On New Invested Capital (RONIC)

Return On New Invested Capital (RONIC) is a figure used to determine the amount of return that a firm could earn on additional contributed capital.

# Return On New Invested Capital (RONIC)

**Return On New Invested Capital (RONIC)** is a figure used to determine the amount of return that a firm could earn on additional contributed capital.

## Return On New Invested Capital Interpretation

Return On New Invested Capital (RONIC) is a calculation used, either by a firm or investors, to determine the amount of return that a firm could earn on additional contributed capital. The calculation measures the return generated when a company converts its capital into capital expenditures, which generate revenues from core operations. A higher RONIC equates to a relatively efficient firm.

Profit growth can be calculated by multiplying the Reinvestment Rate (%) by the Rate of Return (RR). The RR is equivalent to RONIC.