Return on capital employed, ROCE (See Chapter 13 of the Vernimmen) Return on capital employed measures the profitability of capital. It is calculated by dividing operating profit (NOPAT, if ROCE is to be measured on an after-tax basis) by capital employed. Return on capital employed can also be considered as the return on equity if net debt is zero. The capital employed can be taken for the beginning of the period in question, for the end of the period, or the average over the year; ROCE can be calculated on a before- or after-tax basis. Return on capital employed can be calculated by combining operating margin and asset turnover as follows: Operating profit/Capital employed = Operating profit/Sales x Sales/Capital employed. The first ratio, i.e. operating profit after tax/sales, corresponds to the operating margin generated by the company, while the second, sales/capital employed, reflects asset turnover, which indicates the amount of capital (capital employed) required to generate a given level of sales. Return on capital employed is the most important accounting indicator of value creation. Return on capital employed, ROCE (See Chapter 13 of the Vernimmen) Return on capital employed measures the profitability of capital. It is calculated by dividing operating profit (NOPAT, if ROCE is to be measured on an after-tax basis) by capital employed. Return on capital employed can also be considered as the return on equity if net debt is zero. The capital employed can be taken for the beginning of the period in question, for the end of the period, or the average over the year; ROCE can be calculated on a before- or after-tax basis. Return on capital employed can be calculated by combining operating margin and asset turnover as follows: Operating profit/Capital employed = Operating profit/Sales x Sales/Capital employed. The first ratio, i.e. operating profit after tax/sales, corresponds to the operating margin generated by the company, while the second, sales/capital employed, reflects asset turnover, which indicates the amount of capital (capital employed) required to generate a given level of sales. Return on capital employed is the most important accounting indicator of value creation. See all terms in the dictionary of finance To know more about it, look at what we have already written on this subject :

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Definitions of terms begining with the same letter as "Return on capital employed, ROCE" :

R&D RCF RNAV ROCE ROE Range note Ratchet effect Rate of discount Rate of return Rate tunnel Rating Rating agency Rating outlook Raw material prices risk Re-rating Real dilution Real interest rate Real options Realised rate Recapitalisation Receivables Recommended offer Recoverable value Recurrent items Recurring items Redemption

Reference rate Registered bond Regulatory changes Regulatory risk Relative value ratio Rendez-vous clause Repayment by equal instalments Repayment by tranches (or series) Repayment in fine Replacement cost Replicating portfolio Repo, repurchase agreement Representations and warranties, Reps & warranties Reps & warranties Repurchase agreement Required rate of return Requirements in working capital Research and development costs, R&D Reserved capital increase Residual pool Residual value Resistance level Restated net asset value, RNAV Restrictive covenant Restructuring charges Restructuring provisions

Retail investor Retail public offering Retained Cash Flow Retained earnings Return Return on capital employed, ROCE Return on equity, ROE Return on investment Revenues Reverse flex Reverse repo Revolving credit Right of approval Right of first refusal Rights issue Risk Risk of a fraud Risk of default Risk of illiquidity Risk premium Risk-free assets Risk-free rate Risk/return ratio Roadshow Rule 144A