Return on Capital Employed (ROCE)
How efficiently a company generates profit from all its capital — equity and debt.
ROCE = EBIT ÷ Capital Employed × 100
Quick ROCE calculator
₹Cr
₹Cr
ROCE
20.00%
ROCE = EBIT ÷ Capital Employed × 100
What is the Return on Capital Employed (ROCE)?
Return on capital employed measures operating profit (EBIT) against the total capital in the business (equity plus debt). Unlike ROE, it isn’t distorted by how the company is financed.
How to interpret it
ROCE above the company’s cost of capital means it creates value. Because it includes debt, ROCE is often a fairer efficiency gauge than ROE for leveraged businesses.
What’s a good ROCE?
> 20%
Excellent
15–20%
Strong
< 12%
Weak
Above 15% is strong; above 20% sustained is excellent. It should comfortably exceed the company’s borrowing cost.
Common mistakes
- Confusing ROCE with ROE — ROCE uses EBIT and total capital, not just equity.
- Ignoring that a one-off asset sale can inflate EBIT.
See it on a real stock
This ratio computed for any listed company.
Related ratios
All financial ratios →For educational purposes only, not investment advice. Consult a SEBI-registered advisor before investing.