Return on invested capital

ROI=Net Income/Invested capital

It measures the return on capital invested in business. It is also known as return on investment.

Different measures of invested capital

Total debt and equity capital or total assets.
This measure does not distinguish between operating

performance and financing performance of company. Exclusions Unproductive assets. Intangible assets. Accumulated depreciation.
ROA=Net income interest expense(1-T)+minority interest

in income/Average total assets

Long term debt and Equity capital

Long-term capitalization
Excludes current liabilities. Return on long term debt and equity=
Net income interest expense(1-T)+minority interest in

income/(Average long term debt+Average equity)

Equity Capital
Return on equity also captures the effect of leverage

(debt) It excludes preferred stocks. ROE=Net income +Preferred dividend/Average common shareholders equity

Disaggregation of ROA
ROA=Net income/Sales*Sales/Average Assets
Comparison of profit margin and asset turn over. Inverse relation between two measures.