Also found in: Acronyms.


Return on Capital Employed

A measurement of return on the investment needed for a business to function, otherwise known as capital employed, expressed as a dollar amount or a percentage. It is used to show a business' health, specifically by showing how efficiently its investments are used to create a profit. A good ROCE is one that is greater than the rate at which the company borrows.

Because capital employed has no set definition, there are different ways to calculate ROCE. Two common ways are:

ROCE = (Operating Profit Before Tax) / (Total Assets - Current Liabilities) and ROCE = ((Profit before Tax) / (Capital Employed)) * 100.

One limitation to ROCE is the fact that it does not account for depreciation of the capital employed. Because capital employed is in the denominator, a company with depreciated assets may find its ROCE increases without an actual increase in profit. It also neglects inflation, which might depress ROCE unnecessarily. See also: Return on Average Capital Employed (ROACE), Required return.


References in periodicals archive ?
Indicadores de Rentabilidad: ROCE, RNOA, para las cuales se espera un signo negativo
El ROCE, a pesar de ser significativo no arroja el signo esperado lo que se puede explicar debido a que el roce no es la verdadera medida de la rentabilidad de los accionistas, ya que son los flujos de caja futuros los que garantizan la generacion de valor, adicionalmente un mayor roce puede ser producto de mayores niveles de apalancamiento lo que generaria mayor probabilidad de quiebra.
PAT/Total Assets and ROCE are not explained by Net sales as shown in the above table.
PAT/Total Assets and ROCE are also not explained well by Total Assets as shown in the above table.
ROCE for the film business increased from 1 percent in 1990 to 19 percent in 1992.
The 1991 ROCE was 3 percent, and market share was only 3 percent.
By 2022, Nexans ambition is to derive from its current scope of activities 25% more revenues, an EBITDA 2 increased by ~50% to ~600 million euros, and a ROCE exceeding 15%.
In the third quarter of 2010, ROCE stood at 6% and in the first nine months of 2010 -- at 7.
To increase the industry's profitability by 25% as measured by ROCE by creating an educational system focused on the development of the basic, technical, business and leadership skills required for positions in the industry.
To increase the industry's profitability by 25% as measured by ROCE by creating an environment for life-long learning that enables and motivates the industry's people to continuously perform at world-leading levels of safety, productivity and innovation.