(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
June 30,
2012   2011
(a) Return
Income from continuing operations $ 743.6 $ 626.6
Interest expense 59.8 60.1
Income tax provision 223.5 142.7
Purchase accounting depreciation and amortization 20.1   19.3  
Return 1,047.0   848.7  
 
(b) Average invested capital
Short-term debt 175.8
Long-term debt 905.0 904.9
Shareowners’ equity 1,890.6 1,635.3
Accumulated amortization of goodwill and intangibles 742.6 706.7
Cash and cash equivalents (902.4 ) (890.2 )
Short-term investments (162.5 )  
Average invested capital 2,649.1   2,356.7  
 
(c) Effective tax rate
Income tax provision 223.5 142.7
Income from continuing operations before income taxes $ 967.1   $ 769.3  
Effective tax rate 23.1 % 18.5 %
 
(a) / (b) * (1-c) Return On Invested Capital 30.4 % 29.3 %

If you liked this article you might like

Cramer: These Stocks Look Like 'Easy Pickings'

Cramer: The Best Performers Show No Signs of Letting Up

CSX, Arconic Top Sector Gains as Shareholder Activism Drives Them Higher

5 Things You Must Know Before the Market Opens Thursday

How to Play the Coming Robot Revolution