It is a useful measure for comparing the relative profitability of companies after taking into account the amount of capital used.
[1] It is similar to return on assets (ROA), but takes into account sources of financing.
[citation needed] ROCE is used to prove the value the business gains from its assets and liabilities.
The main drawback of ROCE is that it measures return against the book value of assets in the business.
In addition, while cash flow is affected by inflation, the book value of assets is not.