Return on Capital Employed (ROCE)
Return on Capital Employed (ROCE) is a financial ratio used to assess a company's profitability and the efficiency with which it utilizes its capital. It helps determine how effectively a company generates profit from its capital, making it a key metric for investors, financial managers, and stakeholders. ROCE is calculated by dividing earnings before interest and tax (EBIT) by capital employed, which is the total assets minus current liabilities.
How to Calculate ROCE
ROCE = EBIT / Capital Employed
EBIT = Earnings Before Interest and Tax
Capital Employed = Total Assets – Current Liabilities
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