With this ROCE Calculator, you can calculate your company’s profitability and efficiency of capital utilization. Enter the required data to quickly and easily determine the ROCE.

Choose the option to directly input the capital employed or have it calculated based on your financial data.

ROCE Calculator

ROCE Calculator

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Click here if you don't know the capital employed.
 Click here if you don't know the capital employed
ROCE: 0.00%

Calculating ROCE: Formula and Explanation

Return on Capital Employed (ROCE) is a key metric that measures a company’s profitability and efficiency of capital utilization. It shows how well a company uses its invested capital to generate profits.

Formula for calculating ROCE:

\(\text{ROCE} = \left( \frac{\text{EBIT}}{\text{Capital Employed}} \right) \times 100\)

Explanation of the formula:

EBIT (Earnings Before Interest and Taxes):

EBIT is a measure of a company’s operating profit before deducting interest and taxes. It indicates how much profit the company has generated from its operating activities.

Capital Employed:

Capital employed includes all capital invested in the company to generate returns. It is calculated as the sum of equity and long-term liabilities minus cash and cash equivalents:

\(\text{Capital Employed} = \text{Equity} + \text{Long-term Liabilities} – \text{Cash and Cash Equivalents}\)

Multiplication by 100:

Multiplying by 100 expresses ROCE as a percentage. A higher ROCE value indicates more efficient use of capital.

Example:

If a company generates an EBIT of $50,000 and the capital employed is $200,000, the ROCE is calculated as follows:

\(\text{ROCE} = \left( \frac{50,000}{200,000} \right) \times 100 = 25%\)

This means the company has earned a 25% return on its employed capital.

Definition: What is ROCE?

Return on Capital Employed (ROCE) is a financial ratio that measures a company’s profitability and efficiency of capital utilization.
ROCE indicates how much profit a company generates from its employed capital.

The metric is calculated by dividing Earnings Before Interest and Taxes (EBIT) by capital employed (sum of equity and long-term liabilities minus cash and cash equivalents) and multiplying by 100.

A high ROCE value indicates that the company is efficiently using its employed capital to generate profits.

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