Free · Business valuation and cash flow

ROCE from EBIT & Capital Employed

Calculate return on capital employed using assets less current liabilities or equity plus non-current liabilities.

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Calculator inputs

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How to use this calculator

  1. Enter the known values in the units shown. Results update as you type.
  2. Where results are editable, change one to solve backwards. Lock a value to hold it fixed.
  3. Use the worked example to check the method. Reset restores the starting fields.

Use the result with context

Results are estimates for planning and education. Confirm rates, taxes, fees, and legal requirements with the relevant institution or a qualified professional before making a financial decision.

Formula and method

EBIT of 150 on capital employed of 1,000 gives a 15% return on capital employed. A loss of 50 on that capital gives −5%.

ROCE = EBIT ÷ capital employed × 100%; capital employed = assets − current liabilities = equity + non-current liabilities

Worked example

Enter these known values and leave the other values blank.

Earnings before interest and tax
150 USD
Total assets
1500 USD
Current liabilities
500 USD
Capital employed from assets
1000 USD
ROCE from assets
15 %

Assumptions and limitations

  • Use EBIT for the stated period and a clearly identified capital-employed balance. This tool does not automatically average opening and closing capital.
  • Both methods are equivalent when the figures belong to the same complete balance sheet. Switching the method does not reconcile different datasets.
  • Positive capital employed is required. EBIT may be zero or negative, so the result can represent breakeven or an operating loss.
  • Use the same currency and scale in every monetary field. ROCE is an accounting ratio, not a promised investment return.

Common questions

Can ROCE be negative?

Yes. Negative EBIT divided by positive capital employed produces negative ROCE.

Should capital employed be averaged?

That depends on the analysis. To use average capital, enter consistently averaged balance-sheet components and label the period accordingly.

References

Allow zero and negative EBIT and signed equity while requiring positive capital employed and nonnegative liabilities.

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