#
*
Return on Assets Ratio Calculator - Glossary:
*

**Return on Capital Employed (ROCE):**
Shows the proportion of EBIT to capital employed. In other words, return on capital employed shows investors how many dollars in profits each dollar of capital employed generates.

### Formula:

### How to use this equation?

The values for net operating profit or earnings before interest and tax (EBIT) can be obtained from income statement and to calculate capital employed - obtain the values of total assets and current liabilities from the balance sheet. To use this ratio, divide earnings before interest and tax (EBIT) by the capital employed.**Earnings before interest and tax (EBIT):**

Net income or profit before deducting all its interest & taxes.

**Capital Employed:**

It is the total amount of equity invested in a company. It is the sum of shareholders' equity and current liabilities. It can be simplified as total assets minus current liabilities.

**Example:**

Return on capital employed ratio for a company with a reported EBIT of $100,000; $200,000 of total assets and $50,000 of current liabilities is 0.6666 or 66.66%. It means that, a company yields a return of $0.66 per dollar for its capital employed.