Study Notes
Return on Capital
- Level:
- AS, A-Level
- Board:
- AQA, Edexcel, OCR, IB
Last updated 22 Mar 2021
Capital is the amount invested in a business
Return on capital is the percentage return on that investment
The calculation formula is as follows:

Here is an example of this calculation using some business data:

What does the return on capital tell us?
- A measure of the returns made from investing in the business
- How good the business is at converting money invested into profit
- Provides a means of comparison with other investment opportunities
- Opportunity cost – what an investor could have done by investing elsewhere
You might also like
Investment Appraisal - ARR
Study Notes
Return on Capital Employed
Study Notes
Key Issues in Making Investment Decisions
Study Notes
Evaluating Investment Appraisal
Study Notes
Takeovers and Mergers
Topic Videos

John Lewis Reaps a High Return on Investment in E-commerce
18th June 2016
Investment Appraisal Overview
Quizzes & Activities