Disaggregating return on capital employed into sales margin and capital turnover offers a useful starting point for diagnosing firm performance.

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Disaggregating return on capital employed (ROCE) into sales margin and capital turnover can provide insights into a company's performance. Sales margin measures how efficiently a company is able to convert sales into profits, while capital turnover measures how efficiently a company is using its assets to generate sales. By examining both of these factors, analysts can identify areas where the company may be underperforming and take steps to improve overall ROCE.

Disaggregating Return on Capital Employed into Sales Margin and Capital