Difference between ROIC and ROCE?
Hi,
Mind explaining what is the difference between both ROIC and ROCE and what's the formula being used for those two?
From what I understand from McKinsey Valuation book, ROIC = NOPLAT/(Operating Assets-Operating Liabilities)
Not too sure about ROCE. Hope you guys could help to clarify on this.
Thanks all.
ROCE = (NI - Pref Div) / Common Equity ROIC factors all capital into the mix, and not just common equity.
P.S. - Not sure if there is any truth to it, but I have heard it said that Damodaran does a better job of writing a textbook than the McK guys do.
Double post.
Hi Angus.
Thanks for your reply. My bad, I was referring to return on capital employed actually.
Thanks
Ah. In that case, then... common definition would be... NOPAT / (Total Assets - Current Liabilities)...?
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