Return on Capital Employed
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What is Return on Capital Employed? Description
ROCE is a ratio which indicates the efficiency and profitability
of the capital investments of a company.
In other words: the ROCE ratio is an indicator of how well a company
is utilizing capital to generate revenue.
ROCE should normally be higher than the borrowing rate from the company,
otherwise any increase in borrowings will reduce shareholders' earnings.
Calculation of Return on Capital Employed. Formula
The calculation of Return on Capital Employed is done by taking profit
before interest and tax (
EBIT) and dividing
that by the difference between total assets and current liabilities.
Book: Steven M.
Bragg - Business Ratios and Formulas : A Comprehensive Guide
Book: Ciaran Walsh
- Key Management Ratios
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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 ? ...
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ROCE as Performance Indicator The use of the Return On Capital Employed (ROCE) as a performance indicator is questioned in this paper by Enyi Patrick ...
Ratio Analysis, Finanical Statement Analysis
Financial Statement Analysis | Ratio Analysis This presentation provides insights in Financial statement and ratio analysis, and includes the following sectios:
1. F ...
Profitability of Capital Investments
ROCE Diagram Download and edit the 12manage PowerPoint model for limited personal, educational and business use.
Republishing in int ...
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