WHAT IS ROE AND ROCE

 

HOW TO FIND ROE AND ROCE

ROE and ROCE is used in the share market. ROE and ROCE are used differently but this same only a few differences but this work is not the same but ROE, ROCE is most important in the share market this helps us pick a good stock and help Analise good companies. ROCE and ROE are used to find profit.

ROE: - Return on equity

ROE- ROE is investor profit but it’s not correct profit. ROC profit includes investor debt and other debt fund and investor money ROC is not important then ROCE.

      Formula -      Net Profit      

               Average shareholder equity

 

    

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ROCE - Return on Capital Employed

ROCE is used to find investor debts and ROCE is most important than ROE because ROCE finds correct profit this but profit does not include other funds, debts this provides a better indication of financial performance for investor companies with significant debts.

Note- most investors used ROCE because ROCE give clear profit data in the Stock market.

   Formula - ROCE=      EBIT        .

                               Capital Employed

What is EBIT

  EBIT= Earnings before interest and taxes.

Examples-

ROE

    Exempla- Rahul invest money in company = 30000

                     Sometime later Rahul earn a profit= 600000

                     Return on equity=      600000   . 

                                                      30000

            AND ROE IS = 20% answer

ROCE

  Exempla- Capital EBIT= 200

                    Employed= 10

  ROCE=20 answer

                                                                                                                                                                                                                                                 Vipul Negi