ROCE

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Dear All
Can somebody explain in simple terms what return on capital employed is, I thought I understood it at one stage, but now BBP have thrown me out. I thought the ratio for it was net profit shared between capital. but I have now come accross the ratio of net profit shared between capital, shareholders funds, loans etc.
Thanks in advance

CB

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:ROCE

    ROCE measures the return generated for investors against the amount they have invested. It is usually calculated as:

    Profit on ordinary activities before interest and tax (PBIT) divided by capital employed (total assets less current liabilities).

    Hope that helps.

    Kind regards
    Steve
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:ROCE

    Thank you Peugeot, that makes a bit more sense

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