ROIC vs ROCE

memalos

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What is the difference between Invested Capital (and hence ROIC) and Capital Employed (and hence ROCE).
I thought it was the same!
 
Yeah, we use capital employed when we are comparing companies with different capital structure like,
ROCE = Operating profit “before tax” / Capital employed, Capital emploed is total assets minus non interest bearing liabilities.
ROIC= NOPLAT/invested capital. Invested capital = operating assets - operating liabilities
ROIC is better than ROE as it’s not affected by the level of financial leverage.
 
ROCE is also better to compare companies across countries due to different taxes.
 
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