what is return on capital employed roce 
return on capital employed roce is a financial ratio that can be used to assess a company s profitability and capital efficiency in other words this ratio can help to understand how well a company is generating profits from its capital as it is put to use roce is one of several profitability ratios financial managers stakeholders and potential investors may use when analyzing a company for investment formula and calculation of return on capital employed roce the formula for roce is as follows roce is a metric for analyzing profitability and for comparing profitability levels across companies in terms of capital two components are required to calculate roce these are earnings before interest and tax ebit and capital employed also known as operating income ebit shows how much a company earns from its operations alone without interest on debt or taxes it is calculated by subtracting the cost of goods sold cogs and operating expenses from revenues capital employed is very similar to invested capital which is used in the roic calculation capital employed is found by subtracting current liabilities from total assets which ultimately gives you shareholders equity plus long term debts instead of using capital employed at an arbitrary point in time some analysts and investors may choose to calculate roce based on the average capital employed which takes the average of opening and closing capital employed for the time period under analysis 