---
title: "Definition of ROIC 5Y"
url: https://signalscreener.fr/definition/roic-5y/
markdown_url: https://signalscreener.fr/definition/roic-5y.md
description: "The average Return on Invested Capital over 5 years, showing consistent ability to generate returns above cost of capital."
type: glossary-definition
site: Signal Screener
language: en
keywords:
  - "ROIC 5Y"
  - "ROIC (5-Year Average)"
translations:
  de: https://signalscreener.fr/de/definition/roic-5y.md
---

# ROIC (5-Year Average)

## What is ROIC 5Y?

The average Return on Invested Capital over 5 years, showing consistent ability to generate returns above cost of capital.

## Think of it like this

Like looking at your investment returns averaged over 5 years instead of just last year - shows true investing skill.

## Formula

```
5Y ROIC = Average of annual ROIC over 5 years
```

- **Annual ROIC**: NOPAT ÷ Invested Capital each year
- **Average**: Mean of 5 calculations

## Why it matters

- Shows sustainable competitive advantage
- Smooths out cyclical variations
- Better predictor of future returns
- Warren Buffett's preferred metric

## What's a good value?

| Range | Rating | What it means |
|---|---|---|
| > 15% | Excellent | Durable competitive advantage |
| 10-15% | Good | Solid returns above cost of capital |
| 7-10% | Average | Marginal value creation |
| < 7% | Poor | Likely destroying value |

## Real-world example

Coca-Cola maintains 15%+ ROIC over decades, showing incredible brand value.

---

This is educational content, not financial advice.

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