ROCE Calculator

This calculator takes it as a direct input, not derived automatically — Capital Employed = Total Assets − Current Liabilities. Calculate that from the balance sheet before entering it here.

ROE only measures return on shareholders' equity. ROCE measures return on ALL capital employed in the business — equity plus long-term debt — making it useful for comparing capital-intensive businesses that use different amounts of leverage.

EBIT (earnings before interest and tax) is used because ROCE is meant to measure operating performance independent of how the business is financed (debt vs equity) or taxed — net income would already have interest expense subtracted out, distorting the comparison.

As a rule of thumb, ROCE should exceed the company's cost of capital (borrowing rate) — if not, the business is arguably not generating enough return to justify its capital base. Specific benchmarks vary widely by industry.