Return on Capital (ROC)

Analysts, investors and companies widely use return on capital (ROC) as a core metric to determine a company’s profitability from the perspective of how efficientlyit is using its capital. ROC in essence shows much money in dollars and cents is being generated by each dollar of capital. It is calculated by dividing some measure of profits (typically operating profit as in earnings before interest and tax) by some measure of capital (typically total assets minus current liabilities).