Return on Capital Employed

The Return on Capital Employed (ROCE ) is a business metric that measures how effectively and profitably a company employs its capital, and also contains an evaluation of the overall return on capital dar.

Background

The return on capital employed is calculated as the ratio of Net Operating Profit After Taxes (NOPAT ) and the total capital less current, non-interest bearing liabilities and cash and cash equivalents, short of fixed assets and working capital:

Or simplified:

Thus, the code and the return on investment ( ROI ) is comparable, with ROCE (as opposed to ROI) refers only to the employed and capital employed. Therefore, the short-term liabilities (eg trade credit ) and short-term receivables in addition to the Kassen-/Bankbeständen are calculate out, as these items are in the nature of cash and cash equivalents due to their short duration.

In the literature, often following definition can be found again, or in other words

Practicality

While many supporters emphasize the value orientation of this figure, critics complain that the capital structure ( the amount of capital borrowed ) is in principle no attention in the code. Also, the rate of capital can not clearly distinguish often, whereby control by the ROCE in practice is not easy or clear.