Return On Capital Employed (ROCE)
A ratio that indicates the efficiency and profitability of a company's capital investments.
Calculated as:
Investopedia Says:
ROCE should always be higher than the rate at which the company borrows, otherwise any increase in borrowing will reduce shareholders' earnings.
A variation of this ratio is return on average capital employed (ROACE), which takes the average of opening and closing capital employed for the time period. Related Terms:
Earnings Before Interest & Tax - EBIT
Return On Assets - ROA
Return On Equity - ROE
Return On Investment - ROI |