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Kate
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Versions of ROCE Formula
I am a bit confused: why are there so many different variations of the same formula for example I was told that ROCE was Net Profit divided by Fixed Assets plus Current Assets ?
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Abhishek Bhatt
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Financial Management
Kate, I would like to answer your question that a same formula can be expressed in a number of ways. As you said that ROCE =NP / FA + CA.
Above formula can also be expressed as : EBIT(net profit) / (Fixed Assets + Net Current Assets and Not Current Assets) or (Net worth + long term liabilities).
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Franky Chen
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Confusion
Someone insists that ROCE = Operating Income After Tax / Operating Assets. Here is EBIT. Is it misunderstanding?
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Jaap de Jonge
Editor, Netherlands
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To Franky
Yes, is misunderstanding. EBIT is the same as Operating Profit !
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