# Return on Capital Employed Calculator (ROCE)

This calculator will help you determine your companys return on capital employed (ROCE), ROCE is a key metric for assessing a companys profitability and efficiency. To calculate ROCE, simply enter your EBIT, Asset and Liabilities.

### Understanding Return on Capital Employed

#### What is return on capital employed?

The return on capital employed (ROCE) is a financial metric that measures the profit a company makes in relation to its capital employed. Capital employed refers to the total amount of capital used to make profits. It can also refer to the total value of assets a business uses to make earnings.

Importantly, when calculating the ROCE, you generally do not include total liabilities. Because this metric wants to account for long-term debt obligations, the calculation looks at interest-bearing debt. That means mortgages, business loans, and credit cards.

But to have a complete picture of ROCE, you must also consider long-term liabilities, such as multi-year lease payments.

#### What is the ROCE ratio formula?

In its simplest form, the return on capital employed formula looks like this:

ROCE = EBIT / Capital Employed

EBIT stands for earnings before interest and taxes, also known as operating income. Capital employed can be represented in two ways: total assets minus total current liabilities or equity plus non-current liabilities. Therefore, if we can break down the formula, it can come in two forms:

ROCE = EBIT / (Total assetsTotal current liabilities)

or

ROCE = EBIT / (Equity + Non current liabilities)

Which formula you use will depend on the types of liabilities the company has. But for most businesses, both ROCE formulas are applicable. To better understand a company’s ROCE, you can substitute EBITDA — earnings before interest, taxes, depreciation, and amortization — for EBIT in both formulas.

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