Which of the following is the correct mathematical expression for ROCE?
A) ROCE = EBITDA ´ (1 - T) $\div$ (Debt + Equity)
B) ROCE = Net income ´ (1 - T) $\div$ (Debt + Equity)
C) ROCE = EBT ´ (1 - T) $\div$ (Debt + Equity)
D) ROCE = EBIT ´ (1 - T) $\div$ (Debt + Equity)

Question

Which of the following is the correct mathematical expression for ROCE?
A) ROCE = EBITDA ´ (1 - T) $\div$  (Debt + Equity)
B) ROCE = Net income ´ (1 - T) $\div$  (Debt + Equity)
C) ROCE = EBT ´ (1 - T) $\div$  (Debt + Equity)
D) ROCE = EBIT ´ (1 - T) $\div$  (Debt + Equity)

Quizplus · Accepted Answer

ROCE stands for Return on Capital Employed, which measures the company's profitability in relation to the total capital it has invested in the business. It is calculated by dividing the EBIT (Earnings Before Interest and Taxes) by the total capital employed (Debt + Equity), multiplied by (1 - T) where T represents the tax rate.

Therefore, the correct mathematical expression for ROCE is:

ROCE = EBIT × (1 - T) / (Debt + Equity)

Which of the Following Is the Correct Mathematical Expression for ROCE