Versions of ROCE Formula

Return on Capital Employed
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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
 

Confusion

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 !

 

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