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What is Return on Capital Employed (ROCE)

Handbook of Research on Strategic Business Infrastructure Development and Contemporary Issues in Finance
EBIT*100/Capital Employed. This ratio is an indicator of the earning capacity of the capital employed in the business. It is the ratio between earnings before interest and taxes and capital employed. This ratio is considered to be the most important ratio because it reflects overall efficiency of the business.
Published in Chapter:
Working Capital Management: A Study Based on Cipla Ltd.
Ashoke Mondal (West Bengal State University, India) and Uttam Kumar Dutta (West Bengal State University, India)
DOI: 10.4018/978-1-4666-5154-8.ch012
Abstract
It is expected that proper management of working capital contributes positively to the value of the firm, and liquidity of the firm negatively affects the profitability of the company. The purpose of the chapter is to analyze the composition and changes of the working capital and to find the impact of liquidity and efficiency of working capital management on profitability. For this purpose, this study is conducted on Cipla Ltd. for the period 2001-2009. From the study, it is found that there is a significant negative relationship between liquidity and profitability. It also reveals that managers can create value for the firm by reducing the holding period in inventories and receivable.
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A Framework for Longitudinal Analysis of University Spin-Offs
Financial ratio that measures a company’s profitability and the efficiency with which its capital is employed.
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