| The value of all the assets employed in a business, including equity and preference share capital, fixed and current assets, and gross borrowings plus current assets and less current liabilities. The most common use of capital employed is in the calculation of 'Return on Capital Employed' which measures the operating profit of a company as a percentage of capital employed. In effect, ROCE is telling you how efficient a company is at squeezing profit out of capital. A company that gets 20m of profit out of 200m capital employed is doing much better than one that gets 20m of profit out of 800m of capital employed.
|
