Return on Capital Employed (ROCE)

Evaluate how effectively a business generates operating profit from its total employed capital, a broad efficiency benchmark.

EBIT (Operating Profit)

Capital Employed

EBIT$0

Capital Employed$0

Performance-

Return on Capital Employed

0.00 %

Enter values to calculate ROCE

Industry Benchmarks (Good / Average / Poor)

Technology25%+ / 15-25% / <15%

Manufacturing20%+ / 12-20% / <12%

Retail18%+ / 10-18% / <10%

Healthcare22%+ / 14-22% / <14%

Financials15%+ / 10-15% / <10%

Utilities12%+ / 8-12% / <8%

Tips for Improving ROCE

ProfitabilityIncrease margins, reduce costs

Asset UsageOptimize inventory & asset turns

CapitalReduce excess cash & idle assets

Working CapImprove receivables collection

Understanding ROCE

ROCE = (EBIT ÷ Capital Employed) × 100. It measures how effectively a company uses its capital to generate profits. A higher percentage indicates better efficiency.

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Industry use cases

Private Equity Due Diligence Investors evaluate acquisition targets by comparing their ROCE against competitors to assess capital efficiency before making buyout decisions.

Manufacturing Operations Plant managers benchmark ROCE across production facilities to identify underperforming assets and optimize capital allocation.

Retail Expansion Planning Store operators calculate ROCE for existing locations to decide which markets warrant new investments based on capital efficiency.

Equity Research Analysis Financial analysts compare ROCE across competing companies to identify undervalued stocks and flag management performance issues.

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