Return on Capital Employed

Return on Capital Employed (ROCE) = Pre-tax Income/Long term Debt + Shareholder Equity.

Example:

If a company earns $150,000 pre tax, and has $100,000 long term debt and shareholder equity of $300,000, the Return on Capital Employed = 150,000/(100,000+300,000) = 37.5%.


Because pre-tax income is subject to any number of internal accounting adjustments, and because this ratio does not incorporate an assessment of risk, ROCE can not be regarded as of great value when comparing ratios across different companies.

Software Links

Investment-Calc Info

Reference Pages

Return on Invested Capital