123:
The main drawback of ROCE is that it measures return against the book value of assets in the business. As these are depreciated the ROCE will increase even though cash flow has remained the same. Thus, older businesses with depreciated assets will tend to have higher ROCE than newer, possibly better
111:
is used to prove the value the business gains from its assets and liabilities. Companies create value whenever they are able to generate returns on capital above the weighted average cost of capital (WACC). A business which owns much land will have a smaller ROCE compared to a business which owns
72:
In the denominator we have net assets or capital employed instead of total assets (which is the case of Return on Assets). Capital
Employed has many definitions. In general it is the capital investment necessary for a business to function. It is commonly represented as
124:
businesses. In addition, while cash flow is affected by inflation, the book value of assets is not. Consequently, revenues increase with inflation while capital employed generally does not (as the book value of assets is not affected by inflation).
29:
is an accounting ratio used in finance, valuation, and accounting. It is a useful measure for comparing the relative profitability of companies after taking into account the amount of capital used.
92:
ROCE uses the reported (period end) capital numbers; if one instead uses the average of the opening and closing capital for the period, one obtains
273:
248:
115:
It basically can be used to show how much a business is gaining for its assets, or how much it is losing for its liabilities.
353:
205:
424:
241:
133:
183:
Fernandes, Nuno. Finance for
Executives: A Practical Guide for Managers. NPV Publishing, 2014, Chapter 3.
163:
479:
418:
234:
220:
Fernandes, Nuno. Finance for
Executives: A Practical Guide for Managers. NPV Publishing, 2014, p. 37.
484:
365:
139:
452:
377:
359:
302:
441:
394:
291:
145:
8:
331:
279:
78:
430:
400:
268:
201:
196:, Pierre; Quiry, Pascal (2009). "Chapter 4: Capital employed and invested capital".
412:
388:
342:
193:
157:
151:
61:
20:
257:
86:
307:
297:
473:
458:
447:
383:
436:
82:
337:
371:
347:
313:
325:
226:
319:
285:
74:
64:(ROA), but takes into account sources of financing.
471:
214:
192:
242:
177:
16:Financial measure for comparing profitability
249:
235:
200:(2nd ed.). Wiley. pp. 66–78.
112:little land but makes the same profit.
472:
198:Corporate Finance: Theory and Practice
44:Earning Before Interest and Tax (EBIT)
354:Present value of growth opportunities
274:Cyclically adjusted price-to-earnings
230:
320:Enterprise value/gross cash invested
256:
67:
13:
94:return on average capital employed
14:
496:
425:Risk-adjusted return on capital
186:
134:Cash flow return on investment
103:
32:
1:
170:
286:Cash return on cash invested
118:
7:
127:
10:
501:
407:Return on capital employed
164:Return on invested capital
27:Return on capital employed
18:
419:Return on tangible equity
264:
372:Price-earnings to growth
140:Cash surplus value added
19:Not to be confused with
314:Enterprise value/EBITDA
56:(Expressed as a %)
326:Enterprise value/sales
395:Return on net assets
146:Economic value added
280:Capitalization rate
79:current liabilities
453:Sustainable growth
467:
466:
401:Return on capital
269:Buffett indicator
60:It is similar to
492:
480:Financial ratios
413:Return on equity
389:Return on assets
343:Operating margin
258:Financial ratios
251:
244:
237:
228:
227:
221:
218:
212:
211:
190:
184:
181:
158:Return on equity
152:Return on assets
68:Capital employed
62:return on assets
55:
54:
52:
51:
50:Capital Employed
48:
45:
21:Return on equity
500:
499:
495:
494:
493:
491:
490:
489:
485:Yield (finance)
470:
469:
468:
463:
360:Price/cash flow
303:Dividend payout
260:
255:
225:
224:
219:
215:
208:
191:
187:
182:
178:
173:
130:
121:
106:
87:working capital
70:
49:
46:
43:
42:
40:
38:
35:
24:
17:
12:
11:
5:
498:
488:
487:
482:
465:
464:
462:
461:
456:
450:
445:
442:Short interest
439:
434:
428:
422:
416:
410:
404:
398:
392:
386:
381:
375:
369:
366:Price-earnings
363:
357:
351:
345:
340:
335:
329:
323:
317:
311:
308:Earnings yield
305:
300:
298:Dividend cover
295:
292:Debt-to-equity
289:
283:
277:
271:
265:
262:
261:
254:
253:
246:
239:
231:
223:
222:
213:
206:
185:
175:
174:
172:
169:
168:
167:
161:
155:
149:
143:
137:
129:
126:
120:
117:
105:
102:
89:requirement).
69:
66:
58:
57:
34:
31:
15:
9:
6:
4:
3:
2:
497:
486:
483:
481:
478:
477:
475:
460:
457:
454:
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449:
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432:
429:
426:
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420:
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402:
399:
396:
393:
390:
387:
385:
384:Profit margin
382:
379:
376:
373:
370:
367:
364:
361:
358:
355:
352:
349:
348:Price-to-book
346:
344:
341:
339:
336:
333:
332:Loan-to-value
330:
327:
324:
321:
318:
315:
312:
309:
306:
304:
301:
299:
296:
293:
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207:9780470721926
203:
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165:
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99:
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80:
76:
65:
63:
37:
36:
30:
28:
22:
406:
216:
197:
188:
179:
142:(CsVA) index
122:
114:
108:
107:
97:
93:
91:
83:fixed assets
75:total assets
71:
59:
26:
25:
431:Risk return
378:Price-sales
316:(EV/EBITDA)
104:Application
33:The formula
474:Categories
328:(EV/Sales)
282:(Cap Rate)
171:References
194:Vernimmen
119:Drawbacks
322:(EV/GCI)
128:See also
459:Treynor
448:Sortino
427:(RAROC)
288:(CROCI)
136:(CFROI)
53:
41:
39:ROCE =
437:Sharpe
421:(ROTE)
409:(ROCE)
397:(RONA)
362:(P/CF)
356:(PVGO)
276:(CAPE)
204:
166:(ROIC)
455:(SGR)
444:(SIR)
433:(RRR)
415:(ROE)
403:(ROC)
391:(ROA)
380:(P/S)
374:(PEG)
368:(P/E)
350:(P/B)
338:Omega
334:(LTV)
310:(E/P)
294:(D/E)
160:(ROE)
154:(ROA)
148:(EVA)
98:ROACE
85:plus
77:less
202:ISBN
109:ROCE
81:(or
100:).
476::
250:e
243:t
236:v
210:.
96:(
47:/
23:.
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