Return on Capital Employed
by Richard Herd on Jun 1, 2012 at 7:26:59 am
This is me pontificating. I'm sorry. It's important to get this business term out there.
Return on Capital Employed (ROCE) is the name for the idea that if a dollar is spent then that dollar is earned plus some profit.
Saying the same thing in another way: if you spend $1.00, then you need to return $1.33.
The client for instance should be sending a check for $1.33.
To be sure, there's other details (like depreciation schedules) to work out with your CPA, but please -- and I've been explaining this a lot lately so I beg your pardon if you already know it -- do not work for free.