Versions of ROCE Formula

Return on Capital Employed
Knowledge Center

Best Practices
Kate, UK

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 ?

  Abhishek Bhatt, India

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).

  Franky Chen, China


Someone insists that ROCE = Operating Income After Tax / Operating Assets. Here is EBIT. Is it misunderstanding?

  Jaap de Jonge
Editor, Netherlands

To Franky

Yes, is misunderstanding. EBIT is the same as Operating Profit !


More on Return on Capital Employed:
Acceptable Level of ROCE
What is Return on Average Capital Employed (ROACE). Definition
ROCE Lower than Borrowing Rate
🔥Evaluating Investment Returns Into the Future by using Return on Capital
Best Practices
👀Versions of ROCE Formula
Special Interest Group

Do you have a keen interest in Return on Capital Employed? Become our SIG Leader

Return on Capital Employed
Knowledge Center

About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
2022 12manage - The Executive Fast Track. V15.8 - Last updated: 6-7-2022. All names of their owners.