Return on Capital Employed

Accounting Dictionary

Return on Capital Employed

The Return on Capital Employed is Earnings before interest and taxes/total assets-current liabilities.

The return on capital employed has to be more than the cost of capital or the company will go bankrupt. If the company borrows money at 8%, it better make more than 8% in profits or they won’t have enough money to pay back the bank and continue on in business.

Sign Up to Learn More!

Join our mailing list today to get notified of new discount offers, course updates, Roger CPA Review news, and more!