Return on average capital employed (ROACE) is a financial ratio that shows profitability versus the investments a company has made in itself.
Capital employed refers to the amount of capital investment a business uses to operate and provides an indication of how a company is investing its money. Although capital employed can be defined in different contexts, it generally refers to the capital utilized by the company to generate profits....
Put simply, this means it needs to make a bigger return on the money spent funding the business than the average cost of that funding (from both debt and equity). Example capital employed calculation Let’s take a look at an example. The following financial information applies to Company ...
The average stockholders' equity and average capital employed of a company during the accounting year ended December 31, 20X2 were $348,000 and $120,000 respectively. The net profit during the period was $49,000. Calculate return on capital employed of the company....
Average Invested Capital (IC)→ The average invested capital component is the denominator of the ROIC formula. The invested capital can be viewed as the net assets necessary for a business to operate, or the amount of funding required from capital providers to fund the purchase of the net asse...
A more accurate variation of this ratio isreturn on average capital employed(ROACE), which takes theaverageof opening and closing capital employed for the time period. One limitation of ROCE is the fact that it does not account for the depreciation and amortization of the capital employed. Beca...
AverageAgeofInventory=365/(InventoryTurnover) AverageCollectionPeriod=(AccountsReceivables)/(NetSales/365) AveragePaymentPeriod=(AccountsPayables)/(AnnualPurchases/365) TotalAssetTurnover=(Netsales)/(TotalAssets) Debtratio=(TotalLiabilities)/(TotalAssets) EBIT=OperatingProfits Timesinterestearned=EBIT/Interest...
Average Product and Marginal Product of Labor Lesson Summary Frequently Asked Questions What is an example of marginal product of labor? A company currently employees 250 employees and produces an output of 1000 units. They decided to hire 50 more employees, and their output increases to 1200. ...
If employed capital is not given in a problem or in thefinancial statementnotes, you can calculate it by subtracting current liabilities from total assets. In this case the ROCE formula would look like this: It isn’t uncommon for investors to use averages instead of year-end figures for th...
averagetotalassets平均总资产netcreditsales净賖销averageaccountsreceivable平均应收帐cashshortterminvestmentsaccountsreceivableandnotesreceivable现金短线投资应收帐及应收票据currentliabilities流动负债bookvaluepercommonshare普通股每股净值currentratio流动比率dayssalesininventory存货在库天数dayssalesuncollected应收帐款收数期debt...