Return on capital employed
EBIT divided by capital employed (debt + equity − cash). A pre-tax cousin of ROIC commonly used in European reporting and capital-intensive industries.
ROCE = EBIT / (Debt + Equity − Cash)Return on capital employed divides operating profit (EBIT) by capital employed, where capital employed equals debt plus equity minus cash. ROCE is the European-reporting cousin of ROIC and is widely used in capital-intensive industries — energy, industrials, materials — where its pre-tax framing simplifies cross-jurisdiction comparisons (different tax regimes don't distort the comparison). The interpretation is the same as ROIC: persistent ROCE above the cost of capital is value creation, persistent ROCE below it is value destruction. We use ROCE as a triangulation lens for capital-intensive franchises because the pre-tax numerator is more stable across cycles than NOPAT (which can be inflated by tax planning during specific windows) and because it lines up cleanly with the metrics that operators in those industries already track internally.