Return On Capital Employed (ROCE)

Return On Capital Employed (ROCE) is a ratio that indicates the efficiency and profitability of a company's capital investments.

Return On Capital Employed (ROCE)

Return On Capital Employed (ROCE) is a ratio that indicates the efficiency and profitability of a company's capital investments.

 

Return On Capital Employed Formula

The formula for Return On Capital Employed divides net operating profit or EBIT by the employed capital.



Return On Capital Employed Formula:  ROCE = EBIT / Capital Employed

Return On Capital Employed Interpretation

Return On Capital Employed is a long-term profitability ratio because it shows how effectively assets are performing while taking into consideration long-term financing. This is why ROCE is a more useful ratio than return on equity to evaluate the longevity of a company.



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