A simple percentage comparison between the profits generated by a business and the Investment Capital (Shares and Loans) needed to generate that profit. Eg I have Â£1 Million investment in a business and make Â£100,000 profits per annum = 10% Return On Investment Capital.
I make a Â£1 Million profit every year. This sounds good, but if I have used Â£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.