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Return on Capital Employed Formula

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Return on capital employed is a ratio that depicts the profitability of a company’s capital investments. Check FAQs

ROCE = (\frac{EBIT}{TA - CL}) \cdot 100

ROCE - Return on capital employed?EBIT - Earnings Before Interest and Taxes?TA - Total Assets?CL - Current Liabilities?

Return on Capital Employed Example

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Here is how the Return on Capital Employed equation looks like with Values.

Here is how the Return on Capital Employed equation looks like with Units.

Here is how the Return on Capital Employed equation looks like.

463.9175 = (\frac{450000}{100000 - 3000}) \cdot 100

463.9175 = (\frac{450000}{100000 - 3000}) \cdot 100

463.9175 = (\frac{450000}{100000 - 3000}) \cdot 100

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Return on Capital Employed Solution

Follow our step by step solution on how to calculate Return on Capital Employed?

FIRST Step Consider the formula

ROCE = (\frac{EBIT}{TA - CL}) \cdot 100

Next Step Substitute values of Variables

∴

ROCE = (\frac{450000}{100000 - 3000}) \cdot 100

Next Step Prepare to Evaluate

∴

ROCE = (\frac{450000}{100000 - 3000}) \cdot 100

Next Step Evaluate

∴

ROCE = 463.917525773196

LAST Step Rounding Answer

∴

ROCE = 463.9175

Return on Capital Employed Formula Elements

Variables

Return on capital employed

Return on capital employed is a ratio that depicts the profitability of a company’s capital investments.

Symbol: ROCE

Measurement: NAUnit: Unitless

Note: Value can be positive or negative.

Formulas to find Return on capital employed

Earnings Before Interest and Taxes

Earnings Before Interest and Taxes is a measure of a firm's profit that includes all expenses except interest and income tax expenses.

Symbol: EBIT

Measurement: NAUnit: Unitless

Note: Value can be positive or negative.

Formulas to find Earnings Before Interest and Taxes

Total Assets

Total Assets are the final amount of all gross investments, cash and equivalents, receivables, and other assets as they are presented on the balance sheet.

Symbol: TA

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Total Assets

Current Liabilities

Current Liabilities are the company debts or obligations that are due within one year.

Symbol: CL

Measurement: NAUnit: Unitless

Note: Value can be positive or negative.

Formulas to find Current Liabilities

Other formulas in Important Formulas of Business category

Go Break-Even Point

BEP = \frac{FC}{CM}

Go Solvency Ratio

SR = \frac{SF \cdot 100}{TA}

Go Economic Order Quantity

EOQ = (\frac{2 \cdot Cf \cdot Demand}{C h}) \cdot (\frac{1}{2})

Go Percentage off

% Off = 1 - (\frac{SP}{OP})

How to Evaluate Return on Capital Employed?

Return on Capital Employed evaluator uses Return on capital employed = (Earnings Before Interest and Taxes/(Total Assets-Current Liabilities))*100 to evaluate the Return on capital employed, Return on Capital Employed is a ratio that depicts the profitability of a company’s capital investments. Return on capital employed is denoted by ROCE symbol.

How to evaluate Return on Capital Employed using this online evaluator? To use this online evaluator for Return on Capital Employed, enter Earnings Before Interest and Taxes (EBIT), Total Assets (TA) & Current Liabilities (CL) and hit the calculate button.

FAQs on Return on Capital Employed

What is the formula to find Return on Capital Employed?

The formula of Return on Capital Employed is expressed as Return on capital employed = (Earnings Before Interest and Taxes/(Total Assets-Current Liabilities))*100. Here is an example- 463.9175 = (450000/(100000-3000))*100.

How to calculate Return on Capital Employed?

With Earnings Before Interest and Taxes (EBIT), Total Assets (TA) & Current Liabilities (CL) we can find Return on Capital Employed using the formula - Return on capital employed = (Earnings Before Interest and Taxes/(Total Assets-Current Liabilities))*100.

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Return on Capital Employed Formula

Return on Capital Employed Example

Return on Capital Employed Solution

Return on Capital Employed Formula Elements

Other formulas in Important Formulas of Business category

How to Evaluate Return on Capital Employed?

FAQs on Return on Capital Employed

Variable Name