Its always important to consider what kind of return a company is generating from its assets.One way to do this is to look at return on equity (ROE) which weve explained in a previous video. But the problem with ROE is that it doesnt take a companys debt into account.
Another metric called return on capital employed (ROCE) does take debt into account, so its probably a more useful metric for precisely that reason.In this video, we explain how to calculate ROCE and why its useful.
See also:
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
The top stocks in the FTSE 100After a year of strong returns for the UK’s flagship index, which FTSE 100 stocks have posted the best performance in 2024?
-
A junior ISA could turn your child’s pocket money into thousands of poundsPersuading your child to put their pocket money in a junior ISA might be difficult, but the pennies could quickly grow into pounds – and teach them a valuable lesson about money
