Return On Capital Employed

Business, Legal & Accounting Glossary

Definition: Return On Capital Employed

Quick Summary of Return On Capital Employed

Operating profit before deducting interest and taxation, divided by share capital plus reserves plus long-term loans.

Full Definition of Return On Capital Employed

ROCE = profit before interest and tax / share capital + reserves + debentures

The ROCE ratio shows the overall efficiency of the company in employing the resources available.

Capital employed is the amount of capital or funds used by the business. The components of capital employed differ depending on which definition you refer to. Some will only include shareholders funds, whilst others will include long-term borrowings and possibly overdrafts, as they represent funds within the business used to generate profit. When calculating return on capital employed, return is calculated as profit before interest and tax.

Return on capital employed can be broken down further. Profit Margin assesses the quality of profits and asset turnover shows how intensely the company is using the assets.

ROCE = profit margin x asset turnover


profit margin = profit before interest and tax / turnover and

asset turnover = turnover / capital employed

Synonyms For Return On Capital Employed

return on investment, rate of return on capital, return on assets, returns on investment, return on invested capital, ROCE

Cite Term

To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
Modern Language Association (MLA):
Return On Capital Employed. Payroll & Accounting Heaven Ltd. August 06, 2021
Chicago Manual of Style (CMS):
Return On Capital Employed. Payroll & Accounting Heaven Ltd. (accessed: August 06, 2021).
American Psychological Association (APA):
Return On Capital Employed. Retrieved August 06, 2021, from website:

Definition Sources

Definitions for Return On Capital Employed are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 26th April, 2020 | 50 Views.