Rate of Return
First some basic Rate of Return equations:
|Return on Capital Employed (ROCE)||=||Profit for the Year||* 100|
|Equity Shareholders' Funds|
|Return on Total Assets (ROTA)||=||PBIT||* 100|
The rate of return ratios are thought to be the most important ratios by some accountants and analysts. One reason why the rate of return ratios are so important is that they are the ratios that we use to tell if the managing director is doing their job properly.