To calculate the Return on Capital Employed (ROCE), you’ll need two pieces of information: the operating profit and the capital employed.
Page written by Ian Hawkins. Last reviewed on May 20, 2025. Next review due October 1, 2027.
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Return on Capital Employed (ROCE) is a metric that measures a company’s profitability and the efficiency with which it uses its capital. It helps investors understand how well a company is generating profits from its overall capital, including both equity and debt.
Return on Capital Employed (ROCE) measures a company’s profitability and how efficiently it uses its capital. It shows how well a company generates profits from its capital.
Here’s the formula for ROCE:
ROCE = Earnings before interest and taxes (EBIT) / capital employed.
Where:
Learn more from Swoop’s guide on how to calculate capital employed.
ROCE is used as a performance metric by investors, analysts, and managers to assess a company’s profitability and the efficiency with which it utilizes its capital. A higher ROCE indicates that the company is generating more profits relative to the capital invested, which is generally considered favorable.
It’s important to note that ROCE can vary across industries, so it is often more meaningful to compare a company’s ROCE to its industry peers to get a better understanding of its performance.
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