Return on costs (ROC)

Last updated: 25.03.2016

Return on costs (ROC) is one of profitability indicators. It expresses the amount of profit attributable to unit total cost.

 

Calculation formula

 

 

Comparison

  • it is particularly suitable for comparison within the company - especially as an indicator of changes in costs over time as reduction of the ratio can indicate rising costs, and vice versa
  • comparisons between companies makes sense only if they are very similar businesses in the same industry where we can expect similar cost level and gross margin %
  • appropriate comparison is with the industry average


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