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Versions of ROCE Formula
Kate, UK
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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Financial ManagementAbhishek Bhatt, India 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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ConfusionFranky Chen, China Someone insists that ROCE = Operating Income After Tax / Operating Assets. Here is EBIT. Is it misunderstanding? |
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To FrankyJaap de Jonge, Editor, Netherlands Yes, is misunderstanding. EBIT is the same as Operating Profit ! |
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