ROCE Lower than Borrowing Rate

Back to
Return on Capital Employed
Knowledge Center
Next Topic
			
All about Return on Capital Employed
Learn from colleagues and experts

Join now. Completely free. 

Log in

			              Return on Capital Employed > Forum
			            
				              ROCE Lower than Borrowing Rate

			                Samir

			                Can anyone please break down for me how shareholders earnings will be reduced if ROCE is lower than the borrowing rate?
			            
			                  	Why ROCE Should not Be Lower Than Borrowing Rate?
														
Subhaschandra Shenoy, Member
As you know ROCE = Operating Profit (EBIT) / Equity Shareholders Fund.

As the EBIT reduces, the % of ROCE will be reduced. Hence the minim...

			                  	ROCE
														
muton, Accountant, Cameroon, Member
The explanation as to the inverse proportional relationship of ROCE and borrowing rate is not clear....

	                              Special Interest Group Leader
	                            
	                            Interested? Sign up for free. 

	                            Return on Capital Employed
	                          
	                                Summary
	                                ForumAcceptable Level of ROCE
What is Return on Average Capital Employed (ROACE). Definition
Versions of ROCE Formula
ROCE Lower than Borrowing Rate
Evaluating Investment Returns Into the Future by using Return on Capital
Best Practices
Expert Tips
Resources
Back to
Return on Capital Employed
Knowledge Center
Next Topic