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Wednesday, July 27, 2011

Return on Capital Employed Calculation

The Return on Capital Employed (ROCE) is used as a measure of the net profit generated from the long-term capital invested in the firm. The ratio is expressed in percentage terms as follows:

ROCE = [(Net profit before interest and taxation) / (Share capital + reserves + long term loan)] *100%

Learn how to calculate ROCE with the following example:

COO Ltd has the following information:
$1

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