Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

ROCE stands for return on capital employed: a ratio which measures how effectively a company uses capital.

ROCE definition

ROCE stands for return on capital employed: a ratio which measures how effectively a company uses capital.

ROCE is calculated by dividing a company’s earnings before interest and tax (EBIT) by its capital employed. In a ROCE calculation, capital employed means the total assets of the company with all liabilities removed.

By using ROCE, traders and analysts can get a better idea of how efficiently a company is using its capital. Two companies with similar earnings and profit margins may have very different returns on their capital employed, meaning that while they look similar on the surface one is significantly better at spending its capital.

Analysts may use ROCE as a means of performance trend analysis for a company. In the majority of cases, an increasing ROCE ratio implies strengthening long-term profitability. 

 

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