Minimum Acceptable Level of ROCE
Tariq AlBetairi, CEO, Saudi Arabia, Member
My experience indicates that a good ROCE should be more than 6.5% to add real value to the business.
One needs to compensate the following factors:
- 4% for systematic and market risks, plus
- 2% for long term inflation, plus
- 0.5% for uncertainties in data and calculations.
Any ROCE below 6.5% creates doubts about the value that is being added by the business.