ROCE
Business & Finance abbreviation · Finance
| Stands for | Return on capital employed |
|---|---|
| Categories | Business & Finance |
ROCE stands for Return on capital employed, a finance abbreviation.
Profitability ratio equal to EBIT divided by capital employed (total assets minus current liabilities), showing how efficiently a company uses its long-term funding to generate operating profit. It is popular in the UK, Europe and India and in capital-intensive sectors such as utilities, oil and gas, and telecoms.
Example: The utility's ROCE slipped to 7.8 percent because its new grid investments had not yet started earning.
Usage notes
ROCE resembles ROIC but uses pretax operating profit and a balance-sheet definition of capital, so it is easier to calculate from published accounts. Oil majors such as BP and Shell have reported ROCE or close variants as headline performance measures. A ROCE persistently below the cost of capital signals that investment is destroying value.
Related abbreviations
More finance abbreviations
- PIPE – Private investment in public equity
- PV – Present value
- QoE – Quality of earnings
- RAROC – Risk-adjusted return on capital
- RCF – Revolving credit facility
- ROA – Return on assets
- ROE – Return on equity
- ROI – Return on investment
- ROIC – Return on invested capital
- ROS – Return on sales
- RRR – Required rate of return
- S&T – Sales and trading