Which of the following could limit the usefulness of ROCE as a metric?

The usefulness of Return on Capital Employed (ROCE) can indeed be limited by differing capital structures between companies. ROCE is a measure of a company's profitability and the efficiency with which it uses its capital. It is calculated by taking the operating profit and dividing it by the capital employed. When different companies have varying capital structures, such as differing levels of debt versus equity, it can skew the ROCE measure and make comparisons between companies less meaningful.

For instance, a company with a high level of debt may show a higher ROCE simply because it has lower equity, resulting in a greater leverage effect. Conversely, a company with a more balanced capital structure may present a lower ROCE, but this does not necessarily reflect inferior performance. Therefore, without standardizing for capital structure differences, ROCE can lead to misleading conclusions regarding a company's operational efficiency and profitability when comparing it to others in the industry.

Other options, while they may affect the interpretation of ROCE, do not fundamentally limit the metric in the same way that capital structure differences do. Seasonal revenue fluctuations may impact short-term profitability, but they can be accounted for in a longer-term analysis. Changes in market conditions can influence business performance, but are also often reflected in overall financial metrics. Non