WACC vs ROIC Ratio

WACC is weighted average cost of capital (how much the company needs to pay for its debt and equity funding), while ROIC refers to its return on invested capital.

MacDonals, for instance, has a ROIC = 23.27% and WACC =3.45%. The WACC vs ROIC Ratio = 23.27 / 3.45 = $6.7.

Basically, this company earns $6.70 for every dollar of debt and equity it holds. Thus, borrowing (or leverage) has made this company more profitable.