ROCE

• what is return on capital employed?

  ROCE is a measure of relative profitability
• what does it show

  tells us the profits the business has made on resources available to it.
• formula for ROCE


  (operating profit / (total equity + n-c liabilities)) x100
• key points

  -ROCE varies between businesses

  -important measure in capital intensive industries with significant amounts of capital employed

  -based in a snapshot of a business’s balance sheet

  -comparisons with key competitors