24 August 2013
Earnings per share , or EPS, is the amount of money the company actually earns for each share of stock that is outstanding. It is calculated, in percentage terms, as follows:
EPS = Net Profit*100/(#Of Common Shares Outstanding)
Return on Capital Employed (ROCE)
Return on capital employed represents the return generated by the company on its total capital employed. ROCE can be shown as:
ROCE= Earnings before interest and taxes/ Total capital employed
Return on capital employed indicates the profitability of the company on both the equity funds as well as debt funds. Ideally, ROCE should be greater than the rate at which the company is borrowing. ROCE implies the efficiency of operations of a management of a company in a holistic manner. It tells us how the management has used the investments in the company to generate profits for the business.
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