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What it means
Return on capital employed divides operating profit by capital employed (total assets minus current liabilities). It answers a blunt question: for every pound tied up in the business, how much operating profit does it produce? Work yours out with the ROCE calculator.
Why it matters for your company
ROCE is the cleanest test of whether borrowing to grow makes sense. If your ROCE is 18% and the cost of a loan is 12%, the extra capital earns more than it costs — debt is working for you. If ROCE is below the cost of finance, borrowing more will dilute returns. Model the specific decision with the return-on-borrowing calculator before you commit.
What it means for you
Credicorp lends to your company, not to you personally, and takes no personal guarantee. See business loans or apply online.
Frequently asked questions
What is a good ROCE?
It depends on sector and cost of capital, but a ROCE consistently above 15% is often considered strong for an SME. The most useful benchmark is your own cost of borrowing — ROCE should beat it.
How is ROCE different from return on equity?
ROCE measures return on all capital (debt and equity); return on equity measures return on shareholders' money alone. ROCE is better for judging whether taking on debt improves overall efficiency.
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