ROIC, or Return on Invested Capital, measures how efficiently a company uses its capital to generate profits. It compares the company's net operating profit after taxes to its invested capital, showing how well a business turns its resources into earnings. Investors and analysts use ROIC to evaluate management's effectiveness in allocating capital to productive ventures. A higher ROIC suggests a company is generating more returns from each dollar of capital invested, indicating strong performance. It's crucial for assessing long-term value creation.