Return on Capital Employed (ROCE) Calculator

Return on capital employed, or ROCE, shows how efficiently your business turns the long term capital it uses into operating profit. This calculator works out your ROCE from three figures: earnings before interest and tax (EBIT), total assets, and current liabilities. It first finds capital employed by subtracting current liabilities from total assets, then divides EBIT by that figure and shows the result as a percentage. ROCE is a favourite of investors, lenders and directors because it captures returns on both equity and long term debt, making it useful for comparing companies with different funding mixes. A higher ROCE means each dollar of capital is working harder, while a figure near or below your cost of capital is a warning sign. New Zealand business owners, accountants and analysts use it to track performance over time, benchmark against competitors, and test whether a new investment is likely to lift overall returns. To get a fair picture, use EBIT rather than net profit so the ratio is not distorted by how the business is financed or taxed, and use consistent balance sheet dates across the periods you compare. It often helps to average opening and closing capital employed when assets have changed a lot during the year. Watch for one off items in EBIT, large cash balances that inflate assets, and revaluations that can flatter the denominator. Read ROCE alongside margin and asset turnover, since a strong ROCE can come from thin margins on fast moving assets or fat margins on slow ones. Tracking the trend tells you far more than any single year on its own.

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ROCE = EBIT / (total assets - current liabilities). Estimate only, not financial or tax advice.