pbit 500000 roi 20% find capital empolyed
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Explanation:
CORPORATE FINANCE & ACCOUNTING FINANCIAL RATIOS
Return on Capital Employed (ROCE)
By STAFF AUTHOR
Reviewed By MARGARET JAMES
Updated Jul 2, 2020
What Is Return on Capital Employed (ROCE)?
Return on capital employed (ROCE) is a financial ratio that can be used in assessing a company's profitability and capital efficiency. In other words, the ratio can help to understand how well a company is generating profits from its capital. The ROCE ratio is one of several profitability ratios financial managers, stakeholders, and potential investors may use when analyzing a company for investment.
KEY TAKEAWAYS
Return on capital employed is a financial ratio that measures a company’s profitability in terms of all of its capital.
Return on capital employed is similar to return on invested capital (ROIC).
Many companies may calculate the following key return ratios in their performance analysis: return on equity (ROE), return on assets (ROA), return on invested capital (ROIC), and return on capital employed.
Understanding ROCE
ROCE is one of several profitability ratios that can be used when analyzing a company’s financials for profitability performance. Other ratios can include: return on equity, return on assets, and return on invested capital.
How to Calculate the Return on Capital Employed
The formula for ROCE is:
\begin{aligned} &\text{ROCE} = \frac{ \text{EBIT} }{ \text{Capital Employed} } \\ &\textbf{where:}\\ &\text{EBIT} = \text{Earnings before interest and tax} \\ &\text{Capital Employed} = \text{Total assets } - \text{ Current liabilities} \\ \end{aligned}ROCE=Capital Employed