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  • About Us
    • Nick Setchell – RealTime CEO
    • Vistage & TEC WorkshopsNick Setchell has been working with Vistage, the world’s largest CEO organization, since 2001.
    • NewsSee what’s happening with RealTime CEO.
    • Economic Update Report
    • Contact UsReach out to us. If you’re interested in booking Nick to give a keynote address or workshop at your conference, please include the date and location.
  • Concepts
    • Fiscal Focus Financial Statement AnalysisUnlock the hidden numbers in your P&L and balance sheet to see how you’re performing in 11 vital metrics.
    • Should We? / Can We?View, in real time, the actual financial impact of the hundreds of business decisions your team makes every month.
    • 24 Month Rolling ForecastingBlend your trailing twelve months with a rolling 12-month forecast to get a complete financial picture of your business.
    • J Curve ManagementTrack the number of investments you’re undertaking, the 3 phases of each, and the 5 rules for managing them.
    • Return on Operations – ROOView your return on operations percentage — your ROO % — the most powerful number to measure business success.
    • CEO Performance AnalysisBenchmark your performance as a private-company CEO against others in your industry.
  • Resource Center
  • Blog
  • Login
  • SUBSCRIBE

How is the Return on Operations (ROO) calculated?

Return on operations, or ROO, is a private-company derivation of ROCE (Return on Capital Employed). ROO percentage is an interest rate – the interest rate that the business returns to the owner for the capital that the owner has employed in the business.

ROO percentage is the single, most powerful number to measure the business success of a private company. Calculating your return on operations percentage also provides you with a:

  • Roadmap to your business’ strengths and weaknesses
  • Decision support framework

ROO can be calculated by determining, for each dollar of net operating assets, how much revenue is generated each year, multiplied by how much profit is in each dollar of revenue.

Return on operations percentages are NOT determined by industry type or business size. Acceptable ROO is determined by the risk profile that the business faces.

It is calculated as follows:

  • ROO = Operational Profit % x Leverage

See What is Leverage?



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