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Rockwell Automation, Whose Controls Make Factories Run More Efficiently, Posted A 1 Percent Sales Increase. (Photo: Business Wire)

(a) Income from continuing operations, before interest expense, income tax provision, and purchase accounting depreciation and amortization, for the most recent twelve months, divided by;

(b) average invested capital for the year, calculated as a five quarter rolling average using the sum of short-term debt, long-term debt, shareowners’ equity, and accumulated amortization of goodwill and other intangible assets, minus cash and cash equivalents and short-term investments, multiplied by;

(c) one minus the effective tax rate for the twelve-month period.

ROIC is calculated as follows:

 
Twelve Months Ended
December 31,
2012   2011
(a) Return
Income from continuing operations $ 715.1 $ 730.3
Interest expense 60.5 59.7
Income tax provision 225.1 193.5
Purchase accounting depreciation and amortization 20.0   20.0  
Return 1,020.7   1,003.5  
 
(b) Average invested capital
Short-term debt 257.8 70.0
Long-term debt 905.0 905.0
Shareowners’ equity 1,925.5 1,788.6
Accumulated amortization of goodwill and intangibles 760.0 725.5
Cash and cash equivalents (871.9 ) (936.9 )
Short-term investments (302.5 ) (30.0 )
Average invested capital 2,673.9   2,522.2  
 
(c) Effective tax rate
Income tax provision 225.1 193.5
Income from continuing operations before income taxes $ 940.2   $ 923.8  
Effective tax rate 23.9 % 20.9 %
 
(a) / (b) * (1-c) Return On Invested Capital 29.0 % 31.5 %
 




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