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Give one word/term/ phrase for the following statementThe ratio measuring the relationship between net profit and ownership capital employed. |
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Answer» ROCE Explanation: Return on capital employed reflects the company's profitability and the efficiency with which its capital is employed. Algebraically, ROCE = Earnings Before Interest and Tax (EBIT) / Capital Employed A higher ROCE indicates more efficient use of capital. ROCE should be higher than a company’s capital cost. Lower ROCE indicates that the company is not employing its capital effectively and is not adding to the shareholder value. |
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