Return on Capital Employed (ROCE)
Profitability relative to capital invested.
Formula
ROCE = (Operating Profit ÷ Capital Employed) × 100
Real World
Rolls-Royce improved its ROCE dramatically between 2022 and 2024 as its turnaround strategy cut costs and grew operating profit relative to its asset base, reassuring long-term investors.
Exam Focus
Capital Employed = Total Assets − Current Liabilities; using the wrong denominator is the single most common ROCE calculation error.
How well did you know this?