Return on Capital Employed
|
Return on Capital Employed |
|
|
Articles | Books | Dictionary | Faq | Home | Leaders | Organizations | Search
|
Measuring the efficiency of capital investments: Summary of Return on Capital Employed. Abstract
Return on Capital Employed or ROCE is a ratio that indicates the efficiency and profitability of a company's capital investments.
In other words the ROCE ratio is an indicator of how well a company is utilizing capital to generate revenue.
ROCE should normally be higher than the rate that the company borrows at, otherwise any increase in borrowings will reduce shareholders' earnings.
The calculation of Return on Capital
Employed is done by taking profit before interest and tax (EBIT) and dividing
that by the difference between total assets and current liabilities.
Book: Steven M. Bragg - Business Ratios and Formulas : A Comprehensive Guide
Book: Ciaran Walsh - Key Management Ratios
| 👀 | TIP: On this website you can find much more about the efficiency and profitability of capital investments! |
Compare also: Current Ratio |
Cash Ratio |
ROIC |
Discounted Cash Flow |
Free Cash Flow |
Economic Value Added |
CFROI
About us | Advertise | Privacy | Support us | Terms of Service
©2023 Value Based Management.net - All names tm by their owners