What is the difference between ROE(Return on Equity) and
ROCE(Return on Capital Employed)?
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Answer Posted / tulja
Return On Equity-ROE
The amount of net income returned as a percentage of
shareholders equity. Return on equity measures a
corporation's profitability by revealing how much profit a
company generates with the money shareholders haveinvested.
Return on Equity = Net Income/Shareholder's Equity
Net income is for the full fiscal year (before dividends
paid to common stock holders but after dividends to
preferred stock.) Shareholder's equity does not include
preferred shares.
Also known as "return on net worth" (RONW).
Return On Capital Employed-ROCE
A ratio that indicates the efficiency and profitability of a
company's capital investments.
ROCE=EBIT/Total Assets-Current Liabilities
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