A simple percentage comparison between the profits generated by a business and the Investment Capital (Shares and Loans) needed to generate that profit. E.g. I have £1 Million investment in a business and make £100,000 profits per annum = 10% Return On Investment Capital.
I make a £1 Million profit every year. This sounds good, but if I have used £100 Million of investment capital (loans and shares) to generate this amount then this return is not so good after all. This is because I have only returned 1% on the investment capital given to the business to realise this profit.
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