Return on Capital Employed (ROCE)
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4 Terms
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What does ROCE stand for?
Return on Capital Employed
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How is it useful?
Evaluate the overall performance of the business
Provide a target return for individual projects
Benchmark performance with competitors
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What is the equation?
ROCE (%)= Operating Profit (NET Profit)/ Total Equity + Non-Current Liabilities x100
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What is the evaluation of ROCE?
ROCE is a widely used measure of return on investment by businesses
Key points to remember:
ROCE will vary between industries
It is based on a snapshot of a business's balance sheet
Comparisons over time and with key competitors are most useful
Flashcards (51)