Return on Capital Employed (RoCE)

Return on capital employed (RoCE) indicates the returns generated on the employed capital within a period of time. It is used to measure success.

What’s it all about?

  • What is Return on Capital Employed?
  • How is RoCE calculated?

What is Return on Capital Employed?

Return on capital employed (RoCE) means the return generated on the employed capital. The RoCE indicates the rate of return generated from the capital used by a company. This key financial figure can indicate the business success of individual company segments.

Calculating RoCE

The figure is calculated by comparing the earnings before interest and taxes (EBIT) with the employed capital.

The formula is:

RoCE = EBIT / employed capital

The short-term incentive (STI) for the financial year is based on these success parameters – exchange rate-adjusted total growth, EBITDA and RoCE.