In which scenario is ROCE particularly valuable for stakeholders?

Return on Capital Employed (ROCE) is particularly valuable for stakeholders when evaluating historical performance trends. This financial metric measures a company's profitability and the efficiency with which its capital is employed. By analyzing ROCE over time, stakeholders can identify patterns in how effectively a company has been using its capital to generate profits.

Tracking historical ROCE allows stakeholders to see whether the company is improving in its capacity to generate returns on the invested capital, which can offer insights into operational efficiency, strategic decisions, and overall financial health. This trend analysis can highlight strengths or weaknesses in performance, directing focus toward necessary improvements or changes in strategy.

While each of the other scenarios has its importance, they do not leverage the true purpose of ROCE in the same way. High marketing expenditure, for example, may not directly correlate with the measurement of capital efficiency, and comparing ROCE across different industries can be misleading due to varying capital structures and market conditions. Short-term liquidity assessments rely on different metrics that focus on immediate solvency rather than on how well capital is utilized over a longer period.