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Compare between Return on invested capital (ROIC) and Return on capital employed (ROCE).
The major differences between ROIC and ROCE are as follows −
ROIC
ROIC refers to Return on invested capital.
It aims to find the return relative to capital which is invested in business.
It evaluates profitability by considers only capital invested in the business.
ROIC = Net operating profit/invested capital.
Company said to be profitable, if ROIC is greater than zero.
Measures after tax.
It is more important for an investor.
ROCE
ROCE refers to Return on capital Employed.
Its main aim is to find return relative to total capital employed.
It had very broad scope.
ROCE = net operating profit/capital employed.
Company said to be profitable, if ROCE greater than cost of capital.
Measures before tax.
It is important from company.
Updated on: 27-Jul-2020
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