Return on Capital Employed

Accounting Terms Dictionary

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Return on Capital Employed

The Return on Capital Employed is Earnings before interest and taxes/(total assets-current liabilities.

The return on capital employed has to be more than the cost of capital or the company will go bankrupt. If the company borrows money at 8%, it better make more than 8% in profits or they won’t have enough money to pay back the bank and continue on in business.

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