What is return on capital employed? ROCE

Return on Capital Employed, or ROCE in English, is an evaluation indicator that measures the efficiency with which a listed company uses its capital to generate profits. To calculate return on capital employed, divide a company's EBIT by the company's capital employed. Among them, profit before interest and taxes is the sum of the company's net income, interest and taxes, while capital employed is the remaining part of the company's total assets after excluding current liabilities. The calculation method is relatively simple, and all data can be found in the company's financial report. In general, the higher the return on capital employed, the more efficiently a company is using capital to generate profits. From the return on capital employed, investors can see the proportion of a company using its capital to generate profits. For example, when a company's return on capital employed is 0.1, it means that the company can earn $10 in profit for every $100 of capital invested. Therefore, investors often use this value to determine whether the company is worth investing in. The higher the return on capital employed, the higher the investment value of a company.