من قبل
Mirela Minculeasa , Accountant (Accounts Payable and Receivable) , DoubleTree by Hilton Jumeirah Beach
Net present value (NPV) or Return on capital employed it measures the financial performance of the investment independent of the source or method of project financing.
you can find below the formula
NPV (i,N) = ∑ [(Rt) / (1 + i)^t] , where:
t = the time of the cash flow;
i= the discount rate;
Rt = the net cash flow (cash inflow-cash outflow)
N = the total number of the periods
من قبل
Fouad Sila , Education Consultant , Stochos - Sydney, Australia
NPV is used in capital budgeting to assess whether an investment is profitable or not. It adds all cash flows (inflows and outflows) that the investment is expected to produce over its life-span, and discounts the total to calculate the present value of this sum.
On the other hand, return on capital employed (ROCE), as its name suggests, measures the return - i.e. profit/ loss - generated by the capital invested in the business. That is, ROCE is a tool used to measure the profitability of a business. The formula for calculating ROCE is:
ROCE = EBIT / capital employed
where
EBIT = earning before interest and tax
capital employed (capital used in the business) = total assets - current liabilities
I hope that was beneficial :)