Return on capital employed measures operating earnings against the capital supporting the business.
Return on Capital Employed Calculator (ROCE)
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ROCE
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Table of Contents
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What is ROCE Calculator?
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How to Use This Calculator
- Enter or select EBIT, Capital Employed.
- Check the unit beside each measurement. For a percentage or rate, use the scale and time period stated in the form.
- Choose Calculate, then compare the output with the formula and example below. If you change a value or option, calculate again to update the result.
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Formula Used
ROCE = EBIT/capital employed × 100
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Variables Explained
| Input | What it means |
|---|---|
| EBIT | Earnings before interest and tax, before the model applies any tax adjustment. |
| Capital Employed | Use the measured or stated value for this item, with the unit or category shown beside the field. |
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Worked Example
EBIT of 50,000 and capital employed of 400,000 give 12.5%.
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Why Use This Calculator?
Compare the result with the underlying statement, budget or proposed transaction. It is most useful when every amount uses the same reporting period and the same accounting definition.
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Common Mistakes
- Use a consistent capital-employed definition and compare similar periods.
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Frequently Asked Questions
Should I use monthly or annual figures?
Use one consistent period for every amount and rate in the relationship. If a form specifies an annual rate or a monthly amount, follow that label rather than mixing time periods.
Does the result include fees and tax?
Only the costs and taxes represented by the inputs and formula are included. A real transaction can include other charges, so compare the estimate with the underlying agreement or statement.
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Sources & References
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