Net invested capital calculator
The capital actually tied up in running the business.
How it works
Net invested capital = fixed assets + (operating assets − cash − operating liabilities)
The bracket is operating working capital: what the day-to-day cycle absorbs once suppliers have financed their share. Cash is subtracted because it is not invested in operations — it is sitting there. That exclusion is the step this calculation invites people to get wrong, so cash is its own field rather than something you are expected to have already removed.
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Frequently asked questions
- Why is cash taken out?
- Because net invested capital measures what is committed to running the business. Cash in an account is not committed to anything, and leaving it in overstates the capital your operations actually require.
- What counts as operating liabilities?
- The non-financial ones: trade payables, accrued expenses, deferred revenue. Bank debt and loans are financing, not operating, and do not belong here.
- What do I use it for?
- It is the denominator of return on invested capital. Operating profit divided by this number tells you what the business earns on the capital it genuinely ties up.