ROCE is popular for capital-intensive industries such as utilities, telecoms and manufacturing. A ROCE well above the cost of capital indicates a business that creates value; investors also like to see it stable or rising.
How to use the ROCE Calculator – Return on Capital Employed
- EBIT (operating profit)
- Total assets
- Total current liabilities
Results update as you type, and every field accepts the units shown in its menu.
How it works
Enter EBIT, total assets and current liabilities.
Tips
- Use the nominal annual rate and pick the compounding frequency your bank or broker states.
- Small differences in return or fees compound into large differences over decades.
- Run the calculation with a cautious, a central and an optimistic return to see the range of outcomes.
- Past returns do not guarantee future returns – nothing here is investment advice.
Common mistakes to avoid
- Comparing an APR with an APY or effective rate.
- Ignoring inflation, taxes and fees when judging a real return.
- Entering a percentage as a decimal (5 instead of 0.05 is correct here).
Inputs explained
| Field | What to enter |
|---|---|
| EBIT (operating profit) | Amount in your currency |
| Total assets | Amount in your currency |
| Total current liabilities | Amount in your currency |
What each result means
- Capital employed = [Total assets] – [Total current liabilities]
- Return on capital employed (ROCE) = [EBIT (operating profit)]÷[Capital employed]×100
Example values
How the main result changes when EBIT changes and everything else stays at the example values above:
| EBIT (operating profit) | Return on capital employed (ROCE) (%) |
|---|---|
| 1,250,000 | 8.93 |
| 1,875,000 | 13.39 |
| 2,500,000 | 17.86 |
| 3,125,000 | 22.32 |
| 3,750,000 | 26.79 |
| 5,000,000 | 35.71 |
Formula
Capital employed = total assets − current liabilities (= equity + non-current liabilities)ROCE = EBIT ÷ capital employed × 100Worked example
Inputs — EBIT (operating profit): $2,500,000; Total assets: $18,000,000; Total current liabilities: $4,000,000.
Results — Capital employed = $14,000,000.00; Return on capital employed (ROCE) = 17.86 %.
Frequently asked questions
What is a good ROCE?
Above the company's cost of capital; 15–20% or more is strong.
How is ROCE different from ROE?
ROCE includes debt-funded capital; ROE looks only at equity.
Why subtract current liabilities?
They are short-term funding, not long-term capital employed.
What formula does the ROCE Calculator – Return on Capital Employed use?
Capital employed = total assets − current liabilities (= equity + non-current liabilities).