We calculate this as Operating Income (more or less EBIT) divided by Capital Employed which we define as Fixed Assets + Working Capital or, said another way, Total Assets minus Total Current Liabilities.

For the avoidance of doubt, this operating income number is stated post exceptionals because of the scope for manipulation and/or managerial subjectivity and discretion in the exceptional items number (companies tend to highlight exceptional losses but not exceptional gains).

It is also stated post the amortisation of intangibles, and intangibles are correspondingly included in the capital employed figure.

We also provide Greenblatt ROC which measures the return on tangible capital only. A high double digit figure often means that the company has a defensible edge versus its competitors (e.g. a strong brand or a unique product).

However, because ROCE measures return against the book value of assets, it's worth being aware that depreciation can affect ROCE even if cash flow is constant.

This is not the case with ROIC.

This is measured on a prior TTM basis.