Return on Capital Employed (ROCE) is a profitability ratio that measures how efficiently a company
is using its capital to generate profits. The return on capital employed is considered one of the
best profitability ratios and is commonly used by investors to determine whether a company is
The return on capital employed shows how much operating income is generated for each dollar
invested in capital. A higher ROCE is always more favorable as it implies that more profits are
As with any other financial ratios, calculating just the ROCE of a company is not enough. Other
be used in conjunction with ROCE to determine whether a company is truly profitable or not.
Corporate Finance Institute
Financial Ratios
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