Rate of Return on Capital

A Rate of Return on Capital is a economic rate measure based on the ratio of after-tax income flowing to capital (rents, dividends and profits) to an invested capital book value/value of all capital.

• AKA: ROC.
• Context:
  • It can range from being a Macroeconomic Return on Capital Rate to being a Microeconomic Return on Capital Rate.
  • It can range from being a Real Rate of Return on Capital to being a Nominal Rate of Return on Capital.
  • It can be based relative to Revenue, Costs, or Capital Employed.
  • It can be a Average Annual Rate of Return, ...
• Example(s):
  • a Global Return on Capital.
  • a National Return on Capital.
  • a Municipal Return on Capital.
  • a Household Return on Capital.
  • …
• Counter-Example(s):
  • a Capital to Income Ratio.
  • a Savings Rate.
  • an Economic Growth Rate.
• See: NOPAT, Book Value, Invested Capital.

---

---

References

2014

• (Wikipedia, 2014) ⇒ http://en.wikipedia.org/wiki/return_on_capital Retrieved:2014-4-26.
  • Return on capital (ROC) is a ratio used in finance, valuation, and accounting. The ratio is estimated by dividing the after-tax operating income (NOPAT) by the book value of invested capital.

---