Return on Capital Employed
Return on capital employed is an accounting ratio used in finance, valuation, and accounting. The concept explains the ratio in more details and explores how it is can be used in organisations.
Technique Overview
Return on Capital Employed Definition
Return on Capital Employed (ROCE), also termed return on investment (ROI), is the summary ratio which captures in the numerator the earnings of a company's preinterest expenses and tax, and in the denominator the total capital employed calculated as interest bearing long-term debt plus shareholder funds (Andersson et al., 2006:24).
Return on Capital Employed Description *
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Business Evidence
Strengths, weaknesses and examples of Return on Capital Employed *
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Business Application
Implementation, success factors and measures of Return on Capital Employed *
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Further Reading
Return on Capital Employed web and print resources *
Return on Capital Employed references (4 of up to 20) *
- Andersson, T., Haslam, C. and Lee, E. (2006) Financialized Accounts: Restructuring and Return on Capital Employed in the S&P 500. Accounting Forum, Vol. 30(1), p. 21-41.
- Bloomberg (2013) Best Buy Aims for 15% Return on Capital in Joly Turnaround. [Online] Available at (www.bloomberg.com/news/2012-11-13/best-buy-targets-up-to-15-return-on-capital-in-joly-turnaround.html).
- CIMA (2005) CIMA Official Terminology. The Chartered Institute of Management Accountants, Oxford, UK.
- CIPS (2008) How to Procure Capital Equipment. Chartered Institute of Purchasing & Supply, Knowledge Works.
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