Enter the EBIT and fixed capital into the ROEC calculator. The calculator will return the ROEC in percent.
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Return on Employed Capital Formula
The following formula is used to calculate the percent return on employed capital.
ROEC = EBIT / FC * 100
- Where ROEC is the return on employed capital (%)
- EBIT is the earnings before interest and tax
- FC is the fixed capital.
This formula can be substituted to include EBITDA instead of EBIT which is simply the earnings before interest and tax minus debts.
Return on Employed Capital Definition
Return on Employed Capital, or ROEC for short, is a measure of the growth or return of a certain amount of capital in an investment or asset.
How to calculate a return on Employed Capital?
How to calculate return on employed capital
- Determine the EBIT
EBIT is short for earnings before tax and interest. This can show how much a company earns from investments.
- Find the fixed capital
Determine the fixed capital amount. This is how much money a specific company has invested.
- Calculate the ROEC
Enter the information from steps 1 and 2 into the calculator to evaluate the return on employed capital.
ROEC for short, is a measure or ratio of the investments of a company compared to it’s earnings.
ROEC can tell us how efficient one company is over another when it comes to returns on capital spent.
This is done mainly through the use of several management tools for reducing costs and increasing returns.