Define: Return On New Invested Capital

UK Accounting Glossary

Definition: Return On New Invested Capital



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Full Definition of Return On New Invested Capital


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) 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.


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Synonyms For Return On New Invested Capital


RONIC


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Definition Sources


Definitions for Return On New Invested Capital are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 22nd March 2020.