Return On Capital Employed - ROCE

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Dictionary Says

Definition of 'Return On Capital Employed - ROCE'

A ratio that indicates the efficiency and profitability of a company's capital investments.

Calculated as:
Return On Capital Employed (ROCE)
Investopedia Says

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.

Read more on how the ROCE can be an effective analysis tool - Spotting profitability with ROCE.

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