Definition How efficiently a business uses all of its long-term funding to generate profit.
Also called ROCE, Return on capital employed
Example An EBIT of €800k with €4m of capital employed gives a ROCE of 20%.
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Why it matters It shows how efficiently a business uses its money to make profit.
Where it is used Board reports and investment decisions.
How to calculate it EBIT ÷ (total assets − current liabilities) × 100
Worked example An EBIT of €800k with €4m of capital employed gives a ROCE of 20%.
