Home
Australian Stock Ex.
Frankfurt Stock Exch.
Hong Kong Stock Ex.
London Stock Exch.
NASDAQ
New York Stock Ex.
Tokyo Stock Exch.
Toronto Stock Exch.
Asset Allocation
Beginners Guide
Best Market Blogs
Books About Buffett
Bull & Bear Markets
Dividends
Ethical Investment
Favourite Sites
Financial Writers
Free Newsletter
General Investment
Hedge Funds
Investment Trusts
Latest Market News
Learn To Trade
Market Club
New Pages
Risk Analysis
Spread Betting
Stockbrokers
Stock Exchange Info
Stock Exch. Secrets?
Stock Trading
Top 10 Lists
Value Investing
Virtual Stock Exch.
Your Stock Tips
Warning

[?] Subscribe To This Site

XML RSS
Add to Google
Add to My Yahoo!
Add to My MSN
Subscribe with Bloglines

 

More Information About Return On Capital Employed (ROCE)

The ratio for ROCE, the Return On Capital Employed, as discussed on the previous page , can be further broken into two strands.

Trading profit / Sales x Sales / Capital Employed= Trading Profit / Capital Employed

where sales = sales revenue or turnover

This means that:

Trading Profit / Sales = Profit Margin

The second of these strands is:

Sales / Capital Employed

This will express the volume of sales being generated by the business for the amount of capital being employed. It is therefore expressed as a multiple.

Watch These Free Educational Videos And Learn To Trade The Markets!

As you calculate this figure over a number of years, trends may emerge. For example, the ratio may be a rising number which might indicate improved performance. However, it may also be showing static sales being generated from a reducing amount of capital. This may be because of depreciation and thus is not improved performace at all.

Other pages of potential interest are listed here:

Return On Capital Employed - Page 1

Risk Analysis

Investment Definitions

What Is Alpha?

What Is Beta?

What Are Liquidity Ratios?

What Is Gearing?

What Is Operational Gearing?

Dividends Explained