understanding financial jargon
Return On Capital Employed (ROCE)
This ratio shows the overall return a company makes on the money it invests into it's business. If a firm generates operating profits of £80 million, carries debts of £200 million and has a shareholders fund of £200 million, then
ROCE = 80/(200+200) * 100% or 20%
This is the return made for investors and lenders. From an investment point of view the higher this number the better. ROCE can be used to compare the returns available from other companies. An alternative calculation to ROCE is Return on Equity (ROE).
What to do if you need more help
If you need more help with your specific commercial loan, mortgage or insurance requirement please speak to a professional financial adviser.
We hope you found this information useful.
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