ROO – The Single Number to Measure the Value You’re Creating

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 businesses’ 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 or revenue.

ROO% = revenue per dollar of operating assets multiplied by profit per 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.