What is the difference between Invested Capital (and hence ROIC) and Capital Employed (and hence ROCE). I thought it was the same!
anyone on this please?
Yeah, we use capital employed when we are comparing companies with different capital structure like, ROCE = Operating profit “before tax” / Capital employed, Capital emploed is total assets minus non interest bearing liabilities. ROIC= NOPLAT/invested capital. Invested capital = operating assets - operating liabilities ROIC is better than ROE as it’s not affected by the level of financial leverage.
ROCE is also better to compare companies across countries due to different taxes.
thanks guys!!!