Return On Capital Employed Calculator
Measure how efficiently a company uses its capital to generate operating profits (ROCE)
Calculate Return on Capital Employed
From Income Statement
Operating earnings before interest and tax expenses
From Balance Sheet
Current + Non-current assets
Short-term debts and obligations
ROCE Results
Formula used: ROCE = EBIT ÷ Capital Employed × 100%
Benchmark: Generally, ROCE > 15% indicates good performance
Real Company Example: Synnex Corporation
Q1 2020 Financial Data
EBIT (LTM): $840,453 thousand
Total Assets: $11,727,054 thousand
Current Liabilities: $4,227,152 thousand
Capital Employed: $7,499,902 thousand
ROCE Calculation
ROCE = $840,453 ÷ $7,499,902 × 100%
ROCE = 11.21%
This indicates moderate capital efficiency for a technology company
ROCE Benchmarks
Key Insights
ROCE should exceed WACC for value creation
Compare against industry averages
Track trends over multiple years
More comprehensive than ROE
Understanding Return on Capital Employed (ROCE)
What is ROCE?
Return on Capital Employed (ROCE) measures how efficiently a company uses its capital to generate operating profits. It considers both equity and debt financing, providing a comprehensive view of capital efficiency.
Why is ROCE Important?
- •Measures operational efficiency
- •Includes effect of debt financing
- •Helps compare companies across industries
- •Indicates management effectiveness
ROCE vs Other Ratios
ROCE vs ROE
ROCE includes debt capital, while ROE only considers equity. ROCE provides a more complete picture of capital efficiency.
ROCE vs ROA
ROCE excludes current liabilities from capital, focusing on long-term financing sources for more relevant analysis.
Investment Tip: Look for companies with consistently high ROCE (>15%) and improving trends over time for potential investment opportunities.