Return on Capital Employed (ROCE) is a profitability ratio that measures how efficiently a company uses its total capital to generate operating profits.
ROCE evaluates how well a company generates profits from both equity and debt capital. It is widely used by investors to assess capital efficiency and long-term profitability.
Unlike some ratios, ROCE considers the entire capital base, making it useful for comparing companies with different debt levels.
👉 ROCE = EBIT (Operating Profit) ÷ Capital Employed × 100
Where:
"If a company has EBIT of ₹2 lakh and capital employed of ₹10 lakh: 👉 ROCE = 20%"