<div id="readability-page-1"><div><p>Finding a business that has the potential to grow substantially is not easy, but it is possible if we look at a few key financial metrics.  In a perfect world, we'd like to see a company investing more capital into its business and ideally the returns earned from that capital are also increasing.  If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities.    So on that note, <strong>Rolls-Royce Holdings</strong> (LON:RR.) looks quite promising in regards to its trends of return on capital.</p><p> Our free stock report includes 3 warning signs investors should be aware of before investing in Rolls-Royce Holdings. Read for free now. </p><h2> Understanding Return On Capital Employed (ROCE) </h2><p> Just to clarify if you're unsure, ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business.  The formula for this calculation on Rolls-Royce Holdings is: </p><p> <strong>Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)</strong> </p><p>0.13 = UK£2.4b ÷ (UK£36b - UK£17b) <em>(Based on the trailing twelve months to December 2024)</em>.</p><p> Thus, <strong>Rolls-Royce Holdings has an ROCE of 13%. </strong> In absolute terms, that's a pretty normal return, and it's somewhat close to the Aerospace &amp; Defense industry average of 16%.  </p><p><span> Check out our latest analysis for Rolls-Royce Holdings </span></p><figure><img height="316" src="https://imageproxy.pbkrs.com/https://images.simplywall.st/asset/chart/408374-roce-1-dark/1744988314039?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="333" original-src="https://imageproxy.pbkrs.com/https://images.simplywall.st/asset/chart/408374-roce-1-dark/1744988314039"/><figcaption>LSE:RR. Return on Capital Employed April 18th 2025</figcaption></figure><p> Above you can see how the current ROCE for Rolls-Royce Holdings compares to its prior returns on capital, but there's only so much you can tell from the past.  If you'd like to see what analysts are forecasting going forward, you should check out our free analyst report for Rolls-Royce Holdings . </p><h2> What Does the ROCE Trend For Rolls-Royce Holdings Tell Us? </h2><p> We're delighted to see that Rolls-Royce Holdings is reaping rewards from its investments and has now broken into profitability.  The company now earns 13% on its capital, because  five years ago it was incurring losses.  On top of that, what's interesting is that the amount of capital being employed has remained steady, so the business hasn't needed to put any additional money to work to generate these higher returns.  So while we're happy that the business is more efficient, just keep in mind that could mean that going forward the business is lacking areas to invest internally for growth.  After all, a company can only become a long term multi-bagger if it continually reinvests in itself at high rates of return.   </p> <p> On a side note, Rolls-Royce Holdings' current liabilities are still rather high at 47% of total assets.  This can bring about some risks because the company is basically operating with a rather large reliance on its suppliers or other sorts of short-term creditors.   Ideally we'd like to see this reduce as that would mean fewer obligations bearing risks.  </p> <h2> The Bottom Line On Rolls-Royce Holdings' ROCE </h2><p> In summary, we're delighted to see that Rolls-Royce Holdings has been able to increase efficiencies and earn higher rates of return on the same amount of capital.       And with the stock having performed exceptionally well over the last  five years, these patterns are being accounted for by investors.   With that being said, we still think the promising fundamentals mean the company deserves some further due diligence.   </p><p> On a final note, we found <strong> 3 warning signs for Rolls-Royce Holdings</strong> (1 is potentially serious)  you should be aware of.   </p><p> If you want to search for solid companies with great earnings, check out this <strong>free</strong> list of companies with good balance sheets and impressive returns on equity. </p><div><p>If you're looking to trade Rolls-Royce Holdings, open an account with the lowest-cost platform trusted by professionals, Interactive Brokers.</p><p>With clients in over 200 countries and territories, and access to 160 markets, IBKR lets you trade stocks, options, futures, forex, bonds and funds from a single integrated account.</p><p>Enjoy no hidden fees, no account minimums, and FX conversion rates as low as 0.03%, far better than what most brokers offer.</p><p><span>Sponsored Content</span></p></div></div></div>

RYCEY

<p>Rolls-Royce Holdings (LON:RR.) shows promising trends in return on capital, with a current ROCE of 13%, close to the industry average of 16%. The company has improved efficiency, breaking into profitability after five years of losses, without needing additional capital investment. However, high current liabilities at 47% of total assets pose risks. While the stock has performed well, further due diligence is recommended due to three identified warning signs.</p>

Returns At Rolls-Royce Holdings (LON:RR.) Are On The Way Up