Problems with calculation of ROIC

Dear colleagues, I have one problem with calculation of accounting ROIC. I want to calculate book return on NET invested assets, which can be estimated simply as NOPAT divided by Net Debt + Shareholders Equity. The problem is if a company is a net cash one. In this case if net cash exceeds shareholders equity the company has negative net invested capital and calculated ROIC would be economically absurd. Any ideas how to treat this case?

Wouldn’t it only be negative if NetCash > (Debt+Shareholder Equity)? If that is the case, you really do have negative net invested capital, because someone could buy shareholder equity, pay off the debt, keep the excess cash, and make a profit. If NetCash > ShareholderEquity but not >(Debt+Shareholder Equity), you don’t have negative ROIC, but you do have a prime takeover candidate because the equity is essentially free to a LBO raider, as long as corporate cash flow can cover interest payments and/or debt can be refinanced attractively.