Return On Capital Employed (ROCE)

Formal

Return On Capital Employed - a measure of the historic performance of a company’s capital investments – not to be confused with the future measure, ROI. It is calculated by dividing the ongoing profitability of a business by it’s net assets (assets minus liabilities).

Real-world Example

A company generates $500k in operating profit from $2.5M in net assets. That's a ROCE of 20%, showing how efficiently it uses its capital base to generate profit.