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Return on Capital Employed

The Return on Capital Employed is a really useful set of ratios to help with the assessment of capital investment projects.  The three examples in this video are the most simplest versions.  If you are familiar with financial ratios you can add to the base measurements to give you a more thorough analysis. Do remember that whilst analysing is important – you can’t get a return on investment if you don’t invest.  There is always some risk.

Feel free to request the templates laura@thehiddenedge.co.uk. I am happy to share.

1. Recognise the three principal methods of evaluating whether a project is of value to an enterprise

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2. Consider the sort of business decisions you currently use an Accounting Rate of Return to assess

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3. Use the Payback Period to assess when you assume a return on investment

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4. If the Payback Period is more than 12 months, calculate the Net Present Value

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5. Set out the Return on Capital Employed for purchase levels as part of your business strategies

Please do share your experiences with these models in the comments below.  I am building a portfolio of small business case studies and would love to include examples of what has worked well for you.

PS – If you need further help then give me a call on 07962 626604 to arrange a Skype session with me.

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