Today we are going to look at Gokul Refoils & Solvent Ltd (NSE:GOKUL) to see whether it might be an attractive investment prospect. Specifically, we’re going to calculate its Return On Capital Employed (ROCE), in the hopes of getting some insight into the business. First, we’ll go over how we calculate ROCE. Then we’ll compare its ROCE to similar companies. Then we’ll determine how its current liabilities are affecting its ROCE. ROCE measures the ‘return’ (pre-tax profit) a company generates from capital employed in its business. Generally speaking a higher ROCE is better. Overall, it is a valuable metric that has its flaws. Author Edwin Whiting says to be careful when comparing the ROCE of different businesses, since ‘No two businesses are exactly alike. Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets – Current Liabilities) One way to assess ROCE is to compare similar companies. Using our data, Gokul Refoils & Solvent’s ROCE appears to be around the 12% average of the Food industry. Separate from how Gokul Refoils & Solvent stacks up against its industry, its ROCE in absolute terms is mediocre; relative to the returns on governm...