Return on capital employed

(ROCE). An accounting measure of management performance, calculated as the accounting profits ('return') divided by the total book value of the capital employed to earn the profits.

This measure needs care in its definition and application, because both the 'return' and the 'capital employed' inputs can be defined in different ways.

When ROCE is used in the calculation of Economic Value Added, its inputs are defined as: Return = PBIT x (1 - Tax rate) Capital Employed = Book value of Equity + Book value of Debt.

See also

• Accounting rate of return
• Book value
• Capital employed
• Economic value added
• Profit before interest and tax
• Profitability
• Return on investment