What does ROCE stand for in financial terms?

ROCE stands for Return on Capital Employed. This financial metric is crucial for assessing a company's profitability and efficiency in using its capital. It indicates how well a company is generating profits from its total capital employed, which includes equity and debt financing used in the business.

The calculation typically involves dividing a company's earnings before interest and tax (EBIT) by its capital employed. A higher ROCE percentage suggests that the company is utilizing its capital effectively to generate profits, making it a key indicator for investors and management alike when evaluating overall business performance.

The other options—Return on capital expenses, Return on capital exports, and Return on capital equity—do not accurately reflect the standard terminology or formula used in financial analysis, which reinforces why "Return on Capital Employed" is the correct understanding of ROCE.