Versions of ROCE Formula
Kate 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 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 Someone insists that ROCE = Operating Income After Tax / Operating Assets. Here is EBIT. Is it misunderstanding?
Jaap de Jonge, Management Consultant, Netherlands Yes, is misunderstanding. EBIT is the same as Operating Profit !
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