Financial analysis : Question 3
Could you give me a definition of return on capital employed?
ROCE (return on capital employed) is the return on operating assets independently of the way they were financed.
It is calculated by dividing operating profits by capital employed. Capital employed is the sum of a company's working capital and its fixed assets, or, which works out to the same thing, the sum of equity and net debt.
It can be calculated before tax, like previously, or after, by multiplying the previous result by (1 - tax rate).
For more information check out the site glossary or chapter 13.
It is calculated by dividing operating profits by capital employed. Capital employed is the sum of a company's working capital and its fixed assets, or, which works out to the same thing, the sum of equity and net debt.
It can be calculated before tax, like previously, or after, by multiplying the previous result by (1 - tax rate).
For more information check out the site glossary or chapter 13.