Return On Capital Employed - ROCE

What Does Return On Capital Employed - ROCE Mean?
A ratio that indicates the efficiency and profitability of a company's capital investments.

Calculated as:

Investopedia explains Return On Capital Employed - ROCE
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.