when analyzing profitability efficiency in terms of capital both roic and roce can be used both metrics are similar in that they provide a measure of profitability per total capital of the firm 
in general both the roic and roce should be higher than a company s weighted average cost of capital wacc in order for the company to be profitable in the long term roic is generally based on the same concept as roce but its components are slightly different the calculation for roic is as follows net operating profit after tax is a measure of ebit x 1 tax rate this takes into consideration a company s tax obligations but roce usually does not invested capital in the roic calculation is slightly more complex than the simple calculation for capital employed used in roce invested capital may be either orthe invested capital is generally a more detailed analysis of a firm s overall capital example of how to use roceconsider two companies that operate in the same industry ace corp and sam co the table below shows a hypothetical roce analysis of both companies as you can see sam co is a much larger business than ace corp with higher revenue ebit and total assets however when using the roce metric you can see that ace corp is more efficiently generating profit from its capital than sam co ace s roce is 44 cents per capital dollar or 43 51 versus 15 cents per capital dollar for sam co or 15 47 