Definition
ROCE is a financial metric that measures a company�s profitability and the efficiency with which it uses its capital to generate returns, calculated by dividing earnings before interest and taxes (EBIT) by capital employed.
Related Services
Investment consulting, capital budgeting, and financial performance analysis help businesses improve their ROCE by optimizing capital allocation and operational effectiveness.
Problem and Application
A low ROCE suggests that a business is not generating sufficient returns from its capital, requiring better investment strategies or cost management.
Conclusion
ROCE is a crucial metric for assessing capital efficiency, guiding businesses to maximize returns while minimizing the cost of capital.
