what is invested capital 
invested capital is the total amount of money raised by a company by issuing securities to equity shareholders and debt to bondholders return on invested capital roic is used to gauge how well a company allocates capital to profitable activities total debt and capital lease obligations are added to the amount of equity issued to investors invested capital is not a line item in the company s financial statement because debt capital leases and stockholders equity are each listed separately in the balance sheet understanding invested capitalcompanies must generate more in earnings than the cost to raise the capital provided by bondholders shareholders and other financing sources or else the firm does not earn an economic profit businesses use several metrics to assess how well the company uses capital including return on invested capital economic value added and return on capital employed a firm s total capitalization is the sum total of debt including capital leases issued plus equity sold to investors and the two types of capital are reported in different sections of the balance sheet assume for example that ibm issues 1 000 shares of 10 par value stock and each share is sold for a total of 30 per share in the stockholder s equity section of the balance sheet ibm increases the common stock balance for the total par value of 10 000 and the remaining 20 000 received increases the additional paid in capital account on the other hand if ibm issues 50 000 in corporate bond debt the long term debt section of the balance sheet increases by 50 000 in total ibm s capitalization increases by 80 000 due to issuing both new stock and new debt 