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.
See the figure on the right.


Book: Steven M.
Bragg  Business Ratios and Formulas : A Comprehensive Guide 
Book: Ciaran Walsh
 Key Management Ratios 
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ROCE Diagram
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Compare with: Current Ratio
 Cash Ratio 
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