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What is the difference between return on equity and return on capital employed?

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Investors can use various methods to compare different companies within the same sector. One tool is to measure the return in equity and also return of capital employed. In this article we discuss what the difference is between the two. Return on Equity The return on equity (ROE) ratio is a tool that investors can use to compare companies from the same industry to identify which is the best out of the group. It essentially measures how effective management uses …

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What does return on capital employed mean?

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Investors can use various fundamental ratios to evaluate the financial health of a company. One popular ratio they may use is return on capital employed. In this article we discuss what this is and why it is useful. Definition The return on capital employed ratio measures how the well company is using their capital to generate profits. A higher ratio indicates a high return on capital invested. Formula to calculate return on capital employed (ROCE): Why this ratio is useful? …

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