MANAGEMENT

Detailed explanation-1: -Return on Capital Employed (ROCE) or Return on Investment (ROI) Return on capital employed (ROCE) or Return on Investment is a profitability ratio that measures how well a company is able to generate profits from its capital.

Detailed explanation-2: -Some common examples of profitability ratios are the various measures of profit margin, return on assets (ROA), and return on equity (ROE). Others include return on invested capital (ROIC) and return on capital employed (ROCE).

Detailed explanation-3: -Return on equity (ROE) measures the business’s ability to use its invested capital (from shareholders) and retained earnings to generate income. The invested capital comes from shareholders investments in the company’s shares and its retained earnings and is leveraged to create profit.

Detailed explanation-4: -Return on assets (ROA), as the name suggests, shows the percentage of net earnings relative to the company’s total assets. The ROA ratio specifically reveals how much after-tax profit a company generates for every one dollar of assets it holds.

Detailed explanation-5: -3. Activity (or Turnover) Ratios: This refers to the ratios that are calculated for measuring the efficiency of operations of business based on effective utilisation of resources. Hence, these are also known as ‘Efficiency Ratios’.