What is return oncapital employed - performance ratios, Financial Management

Assignment Help:

What is Performance ratios

ROCE

Return oncapital employed (ROCE)= (Profit before interest and tax (PBIT) / Capital employed) * 100%

ROCE measures profitability and illustrates how well the business is utilising its capital to generate profits. Capital employed is debt and equity. Equity is shareholders' funds (shareholders 'funds) and debt is noncurrent liabilities. Capital employed can be found from the statement of financial position by taking shareholders' funds (share capital and reserves) and long term debt.

ROCE can be broken down in two parts, asset turnover and operating profit margin.

A low ROCE is either caused by a high capital employed orlow profit margin. A high ROCE is either caused by low capital employed orhigh profit margin. It is hence important to look at the profitability, assets, liabilities and share capital when trying to give reasons for change in ROCE.

 


Related Discussions:- What is return oncapital employed - performance ratios

Types of firms in securities firms and investment banking, What are the typ...

What are the types of firms that securities firms and investment banking industry included? Into the USA, the securities firms and investment banking industry comprises several

Public provident fund, Public Provident Fund (ppf) The Public Provident...

Public Provident Fund (ppf) The Public Provident Fund (PPF) scheme was started in 1968-69 with the aim to provide a financial instrument to workers in the unorganized sector to

Weighted average cost of capital of firm, Weighted average cost of capital ...

Weighted average cost of capital of Firm: Use the following information to answer the questions. Security Beta Expected retur

Define cash management, Cash Management: - Cash management comprises mainta...

Cash Management: - Cash management comprises maintaining optimum cash balance and efficient collection and disbursement of cash. Methods or else Devices of Cash Management: - Th

BUS 430 Finance Seminar, Image Storage Corporation has 1,000,000 shares out...

Image Storage Corporation has 1,000,000 shares outstanding. It wishes to issue 500,000 new shares using a (North American) rights issue. If the current stock price is $50 and the s

Explain about centralised treasury function, Q. Explain about Centralised t...

Q. Explain about Centralised treasury function? Treasury departments are usually a feature of larger companies than Frantic although it is perhaps beneficial to consider the be

What is the advantages of IFRS 8, What is the advantages of IFRS 8 A...

What is the advantages of IFRS 8 Advantages Allows users to view internal management's approach and highlights what's important from management's point of view.

Explain life insurance in detail, Question 1 Insurance is protection again...

Question 1 Insurance is protection against possible financial loss. Explain life insurance in detail Question 2 Mutual funds are a composite of stocks, bonds, and securities,

Why does money have time value, Why does money have time value? Positiv...

Why does money have time value? Positive interest rates point toward that money has time value.  When one person lets one more borrow money, the first person needs compensation

Show the signs of overtrading, Q. Show the Signs of Overtrading? There ...

Q. Show the Signs of Overtrading? There are a number of usually recognised signs that a company may be overtrading. These are considered mutually with relevant financial data f

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd