What is return on capital employed?

It’s 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 we’ve explained in a previous video. But the problem with ROE is that it doesn’t take a company’s debt into account.

Another metric called return on capital employed (ROCE) does take debt into account, so it’s probably a more useful metric for precisely that reason. In this video, we explain how to calculate ROCE and why it’s useful.

See also:

•  What is return on equity?

Video tutorial - why profit margins matter

Why profit margins are really useful

In this video, Ed Bowsher explains how to calculate a company’s profit margin, why it is the best way to evaluate profitability, and how you can use it when analysing a company.

Video tutorial: why hedge funds can be good news

Why hedge funds can be good news

Hedge funds perform a valuable service by weeding out overvalued shares. In this video, Ed Bowsher explains some of the things they look for when they’re hunting for shares to short.

Video tutorial - what is the current ratio?

What is the ‘current ratio’?

In his latest video, Ed Bowsher looks at the current ratio, which can help you see whether a company has sufficient resources to pay its bills in the near future.

Click here to see all the MoneyWeek video tutorials


Don’t wait until March
Take back control of your investments NOW
Try 6 free issues then pay only £2.45 per issue
(normally £4.25)
Turn a no deal into a profitable one