Return on capital

Ratio of enterprise net profit (i.e. after tax profit) to owner's equity

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Return on capital Capital profit rate ， It refers to the net profit of the enterprise (i.e. after tax profit) and Owner's equity (i.e Total capital ，= Paid in capital + Capital stock + Capital reserve +Surplus reserve+ profit Rate of distribution (credit balance)).

Chinese name: Return on capital
Alias: Capital profit rate

Properties: Laws
Definition: Net profit and Owner's equity Proportion of

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definition

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The return on capital is used to reflect the ability of enterprises to use capital to obtain income. It's also the Ministry of Finance Economic benefits of enterprises An evaluation indicator of.

The connotation of return on capital can be divided into Paid in capital Yield Return on own capital , return on total capital Return on operating capital 、 Rate of return on human capital 。

Return on capital The higher it is, the better the economic benefit of the enterprise's own investment is, the less the risk of investors is, and it is worth investing and continuing to invest. Therefore, it is carried out by investors and potential investors investment decision Important basis for. For business operators, if Return on capital Over debt Capital cost rate , then Moderate debt operation It is beneficial to investors; On the contrary, if the rate of return on capital is lower than the rate of cost of debt capital, excessive debt operation will damage the interests of investors.

Calculation formula

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Return on capital=

Net profit/owner's equity X 100%

For example, the interim net profit of Shanghai Real Estate Joint Venture in 1998 was 31310655 yuan, and the owner's equity was 154341567 yuan, then Return on capital =31310655 yuan/154341567 yuan × 100%=20.29%

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