Capital good


 

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Capital good

A good, such as a machine, that, once in place, becomes part of the capital stock.



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Return on capital employed

Return on capital employed

A measure of a company's profitability. It may be defined as:Earnings before interest and tax divided by total capital employed plus short term borrowings minus total intangibles.ROCE takes all the assets employed in the business, including borrowings, and measures the return the company made on them. If a company has a low ROCE, it is using its resources inefficiently, even if its profit margin is high.Calculation: multiply operating profit by 100, and divide the result by total capital employedExample: Company A made an operating profit of £897m on total capital employed of £4,342m. ROCE was therefore (897 x 100) / 4,342= 20.66%Yardstick: A company's ROCE should be higher than the return on gilts (the benchmark for a risk-free investment return). And unless it is higher than the cost of borrowing, any increase in the company's borrowings or the general level of interest rates will reduce shareholders' earnings. A ROCE of 20% or more is considered very good.


Capitalism

Capitalism

An economic system in which capital is mostly owned by private individuals and corporations. Contrasts with communism.


Core capital

Core capital

The capital required of a thrift institution, which must be at least 2% of assets to meet the rules of the Federal Home Loan Bank.


Capital investment

Capital investment

See: Capital expenditure.


Small capitalization (small cap) stocks

Small capitalization (small cap) stocks

The stocks of companies whose market value is less than $1 billion. Small-cap companies tend to grow faster than large-cap companies and typically use any stocks for expansion rather to pay dividends. They also are more volatile than large-cap companies, and have a higher failure rate.


Further Suggestions

Capital turnover
Capital rationing
Capitalization table
capital market theory
capital adequacy
capitalisation issue
Capital market
Cost of capital
capital growth
Capital appreciation or depreciation
Capital-using
Capital intensity
Dedicated capital
overcapitalised
Capital control
Morgan Stanley Capital International (MSCI)
Short-term capital flow
Risk based capital ratio
capital employed
Capitalization rate
capital movement
Capital loss
Capitalization Weighted Index
Capital formation
Capital market imperfection


 
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