Return On Capital Employed (ROCE)

What Is Return on Capital Employed (ROCE)?

Return on capital employed (ROCE) is a financial quotient that can be castoff in evaluating a company’s productivity and capital productivity. In other words, the ratio can help to apprehend how well a company is producing profits from its capital. The ROCE ratio is one of several profitability ratios financial managers, shareholders, and potential investors may use when examining a corporation for investment.

Understanding ROCE

ROCE is one of several profitability ratios that can be used when examining a corporation’s financials for profitability show. Other ratios can comprise: return on equity, return on assets, and return on financed capital.

ROCE is a metric for examining profitability, and possibly comparing profitability levels across corporations in terms of capital. There are two constituents required to compute return on capital employed: salaries before interest and tax and capital employed.