Return On Capital Employed - ROCE
A ratio that indicates the efficiency and profitability of a company's capital investments.
Calculated as:
Investopedia Commentary
ROCE should always be higher than the rate at which the company borrows, otherwise any increase in borrowing will reduce shareholders' earnings.
A variation of this ratio is return on average capital employed (ROACE), which takes the average of opening and closing capital employed for the time period.
Related Links
Measuring Company Efficiency
Ratio Analysis Tutorial
See also: Earnings Before Interest & Tax - EBIT, Return On Assets - ROA, Return On Equity - ROE, Return On Investment - ROI
Also spelled: ROCE