Accounting Dictionary


Return on Capital Employed.

This is a profitability ratio that analyzes how efficiently a company is using its capital. ROCE is computed by dividing earnings before interest and tax divided by (total assets minus current liabilities). The higher the ratio is the better. Two companies may have the same net income, but if one set of investors invested $400,000 to generate the profit and the other invested $25,000, it’s better to invest the $25,000.

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