Return on Operations - ROO

ROO percentage is the interest rate that the business returns to you for each dollar of capital deployed. It’s simply the single, most powerful number to measure business success.

“RealTime CEO tools are like showing a 19th century doctor 21st century medicine.”

– Allen Hauge, Vistage Chair, St Louis

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.

ROO Flows Through the Tools

Our return on operations percentage is built into our Fiscal Focus Financial Analysis, our Should We? / Can We? scenario builder, and our 24 Month Rolling planning software.

This allows you to view past, present and future ROO percentages to understand the exact financial position of your business right now, or at any point in the past or future.

Learn more about the tools you need