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Finance GlossaryReturn on Capital Employed (ROCE)
Return on Capital Employed (ROCE)
Definition of Return on Capital Employed (ROCE)
Return on Capital Employed is a parameter that shows how efficiently a company managed to use its overall capital to generate profits. The ROCE is obtained by dividing the operational profit by the capital used. A higher ROCE points to strong business efficiency and smart usage of capital. Therefore, it is a crucial metric that can evaluate the long-term performance of a company and the management of its quality.
Related Terms
Adjusted Closing Price
The adjusted closing price of stock accounts for any changes that happen due to corporate actions like dividends, stock splits, and others after trading hours.
Capital Gains Tax
Capital gains are profits, which means they can be taxed. The rate of taxation is based on the type of asset (debt/equity) and holding period. Here is the list of ways capital gains are taxed in India:
| Asset Type | Gains Type | Holding Period | Tax Rate |
|---|---|---|---|
| Equity | Short Term Capital Gains | < 1 year | 15% |
| Long Term Capital Gains | > 1 year | 10% | |
| Debt | Short Term Capital Gains | < 3 years | As per I-T slab |
| Long Term Capital Gains | > 3 years | 20% |
Passive Investing
Passive Investing is an investment strategy where the goal is to mimic the performance of an index representing a broad market, as opposed to attempting to beat the market through active stock picking or market timing. The purpose is to have market returns with minimum costs. This strategy is implemented mostly in Index Funds and exchange-traded funds (ETFs). Passive investing is characterised by low expense ratios and steady performance in the long term, thus avoiding potential human error or poor fund manager decisions.
At The Close Or Closing Price
At the close or closing price is the last traded price of securities like stocks, ETFs, and others at the end of regular market hours.
For example, if a stock hit Rs. 4,500 at 3.30 PM (market close), then that is its price at the close also known as the closing price.
Unlike Adjusted Closing Price, at the close or closing price does not take into account price changes due to corporate actions.
For example, if a stock hit Rs. 4,500 at 3.30 PM (market close), then that is its price at the close also known as the closing price.
Unlike Adjusted Closing Price, at the close or closing price does not take into account price changes due to corporate actions.
Index Arbitrage
Index arbitrage is the method of generating returns by trading the difference between the same or different indices that have a standard value but has diverged momentarily. The way one does index arbitrage can vary as it is possible to trade indices via ETFs, Options, Futures, and more.
Minority Interest
Minority Interest refers to the portion of a subsidiary’s equity that is owned by shareholders other than the parent company. It represents the non-controlling stake in the subsidiary’s profits and net assets. It is shown separately in consolidated financial statements to reflect ownership accurately.
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