Vous êtes sur la page 1sur 2

Firstly, lets try to define both these terms: 1) ROCE: Return on Capital employed - This ratio simply tries

to give the rate of return a business is making on the total capital employed in the business. Total capital will include all sources of funding (shareholders funds + debt). ROCE = EBIT / (shareholders funds + debt) To be consistent with numerator and denominator, the return should be taken prior to interest (the return to lenders) and tax (EBIT) 2) ROIC - Return on Invested Capital - Though ROIC is very similar to ROCE, its a more purist measure of the business return. It tries to calculate the returns from the capital thats been invested and is working towards generating returns. ROIC = NOPAT / (A - C - X + W) NOPAT = Operating Income x (1 - Tax Rate) A - Total Assets C - Cash & Cash Equivalents X - Non-interest bearing current liabilities W - Cost of Assets that has been written-off Explanation for the adjustments: Cash & Cash Equivalents (C) are excluded as it is not invested in the business. So should be excluded when determining the invested capital for the business Non-interest bearing current liabilities (X) are excluded as they are free sources of funds for the company. So the company is funding a part of its assets by borrowing at no cost (often from trade creditors) which helps in higher return for the shareholders, therefore should get reflected. Cost of Assets that has been written-off (W) is added to the invested capital as it was part of the capital that has been invested in the company but was taken off as a writeoff. However, this adjustment is difficult as one needs to determine how long one has to go back and what so how much to include. So, IMO ROIC is a more purist measure of returns better analyzing returns of the business if you are checking if the company is making higher returns than its WACC.

Let me take a shot at these silly acronyms: ROIC is Return on invested capital. This ratio is commonly used to assess the quality of company returns. There are two ways of calculating ROIC 1. The percentage of net operating profit after taxes (NOPAT) to total operating assets. 2. (Net income - Dividends) / Total capital The latter is more commonly used, while the former is used when companies receive their income from other sources. ROCE: Return on Capital Employed It is a ratio that indicates the efficiency and profitability of a company's capital investments. Calculated as: EBIT / (Total Assets - Current Liabilities) ROCE should always be higher than the rate that the company borrows at, otherwise any increase in borrowings will reduce shareholders' earnings. A variation of this ratio is return on average capital employed (ROACE), which takes the average of opening and closing capital employed for the time period