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  • ROE & ROCE Definition

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    Ben
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    Warren Buffett looks at return on equity (ROE) and return on capital employed (ROCE) to evaluate companies. ROE measures how much profit a company generates with the shareholders' equity and is calculated by dividing net income by shareholders' equity. ROCE measures how efficiently a company uses its capital and is calculated by dividing earnings before interest and taxes by capital employed, which includes equity and debt. Buffett prefers companies with consistently high ROEs and ROCEs over 20% that can reinvest profits at high rates of return.

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    Warren Buffett looks at return on equity (ROE) and return on capital employed (ROCE) to evaluate companies. ROE measures how much profit a company generates with the shareholders' equity and is calculated by dividing net income by shareholders' equity. ROCE measures how efficiently a company uses its capital and is calculated by dividing earnings before interest and taxes by capital employed, which includes equity and debt. Buffett prefers companies with consistently high ROEs and ROCEs over 20% that can reinvest profits at high rates of return.

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    © All Rights Reserved
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    7 views5 pages

    ROE & ROCE Definition

    Uploaded by

    Ben
    Warren Buffett looks at return on equity (ROE) and return on capital employed (ROCE) to evaluate companies. ROE measures how much profit a company generates with the shareholders' equity and is calculated by dividing net income by shareholders' equity. ROCE measures how efficiently a company uses its capital and is calculated by dividing earnings before interest and taxes by capital employed, which includes equity and debt. Buffett prefers companies with consistently high ROEs and ROCEs over 20% that can reinvest profits at high rates of return.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    Investing Series: Warren Buffett's favourite metrics: ROE versus ROCE ... https://www.savespendsplurge.com/investing-series-warren-buffetts-favo...

    1 of 11 04-Sep-21, 10:32 PM
    Investing Series: Warren Buffett's favourite metrics: ROE versus ROCE ... https://www.savespendsplurge.com/investing-series-warren-buffetts-favo...

    2 of 11 04-Sep-21, 10:32 PM
    Investing Series: Warren Buffett's favourite metrics: ROE versus ROCE ... https://www.savespendsplurge.com/investing-series-warren-buffetts-favo...

    3 of 11 04-Sep-21, 10:32 PM
    Investing Series: Warren Buffett's favourite metrics: ROE versus ROCE ... https://www.savespendsplurge.com/investing-series-warren-buffetts-favo...

    4 of 11 04-Sep-21, 10:32 PM

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