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.

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