Profitability compares a business' level of profits to some other factor such as the amount of capital
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What does Return on Capital Employed (ROCE) assess?
It is a financial ratio that measures a company's profitability and the efficiency with which its capital is employed
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How do you calculate ROCE (%)?
Operating Profit / Capital Employed X 100
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What is capital employed?
Total Equity + Non-Current Liabilities
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What are examples of equity?
Shareholders' funds and retained profit
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What does a ROCE indicate?
That a larger chunk of profits can be invested back into the compay for the benefit of shareholders. A high ROCE is, therefore, a sign of a successful growth company
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Card 2
Front
What does Return on Capital Employed (ROCE) assess?
Back
It is a financial ratio that measures a company's profitability and the efficiency with which its capital is employed
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