Wednesday, October 29, 2008

Return on Capital

Return on Capital denotes how well a company yields cash in relation to the capital that he has invested in his business.It is the net income less tax after dividing capital investment which is often depicted in percentage. Monetary resource,shares,long term debt are used to calculate Return on Capital.
When return from capital is more than capital cost,value is said to be created but when it is less, value is said to be lost.