ROE= Net income/ Shareholder’s equity 
ROE measures the profitability generated relative to the equity capital provided by shareholders. From a management control perspective, ROE is used to monitor how effectively the entire company (at the Group level) converts owner capital into accounting profit. It captures both operating performance and financing/leverage effects. ROE can be distorted by financial decisions (e.g., high debt levels) and thus mixes operational and financing performance – it is not purely operational. A high ROE can be achieved through strong profitability or high financial leverage – thus, it should be interpreted carefully in light of the company’s capital structure. 

ROCE = Operating profit / Capital employed 
ROCE = EBIE/Sales * Sales/Capital employed 
ROCE = Profit margin * Capital turnover 
Profit Margin 
Ventes - Coûts (matière, personnel, autres frais...) + Revenus financiers = Marge nette (EBIT / Ventes)
•  Augmenter la marge : baisse des coûts, hausse des prix.
Capital Turnover 
= Rotation des actifs (Ventes / Capital Employé)
•  Augmenter la rotation : réduire les stocks, vendre plus vite.
ROCE measures the operating efficiency – how well a business generates profits 
from the capital invested in operations, independent of how it is financed.
In management control, ROCE is favored to assess whether the business is using 
its assets effectively to create value before considering financing structure 
(debt/equity decisions).
ROCE isolates operating performance and is better aligned with internal 
accountability structures.
It is often compared to the cost of capital to judge whether value is being created. 

Residual Income (RI) = (EBIT−(Capital Employed×WACC))
Cela mesure combien d’euros sont réellement créés au-dessus du coût du capital 
(le WACC).
Le principe est très simple : Est-ce que ton projet rapporte PLUS que ce qu’il 
coûte (WACC) ?
-  Si oui : RI augmente toujours. Peu importe si ce projet est génial ou juste
"pas mal", tant qu'il rapporte plus que le coût du capital (WACC), il 
ajoute de la valeur absolue à l’entreprise.
Exemple :
-  Le WACC = 10%
-  Ton projet rapporte 12% ➔ il est > WACC ➔ c’est positif pour le RI.
Même si ton entreprise fait déjà des projets à 20%, ça reste une bonne décision 
d’ajouter ce projet car RI augmente.
DONC DIFFÉRENCE ENTRE ROCE ET RI 
Nouveau projet à 12% (WACC = 10%)
➔ RI augmente (car > WACC)
 Peut baisser (si ton entreprise avait déjà 20% de ROCE)
ATTENTION : On appelle EVA le nom marketing du RI après qu’il soit utilisé par 
les cobinets de conseil 
Contribution-based analysis focuses on incremental (‘separable’) revenues and 
incremental (‘separable’) costs associated with a specific decision. 
It ignores ‘common’ (oftentimes: fixed) costs that do not change as a result 
of the decision.
The central idea is that as long as the additional contribution is positive 
and common/fixed costs are already covered, an action can improve overall 
profitability – even if the full cost of the product/service is not covered. 

Application: 
1. Accepting an additional order at a price below full cost 
•  If a company has excess capacity, accepting a lower-priced order can still 
be worthwhile if the price covers variable costs and adds positive contribution margin. 
•  Fixed costs are already incurred, so the incremental contribution improves 
overall profit. 
Drawback : Risk of customer expectation issues: customers may expect lower prices in the future. 
2. Discontinuing production and sales of a product 
•  If a product has a negative contribution margin (i.e., variable costs exceed 
revenue), discontinuing it would immediately improve overall profit. 
•  However, if contribution margin is positive, discontinuing the product would 
reduce total contribution and could worsen the profit situation, even if full 
costs are not fully covered. 
Drawback : May overlook strategic reasons to keep a product (e.g., maintaining 
a full product line or customer relationships). 
3. Choosing among multiple orders/ contracts 
•  When resources (e.g., machine hours, materials) are limited, companies should 
prioritize orders that maximize contribution margin per limiting factor (e.g., 
contribution per machine hour). 
•  This ensures the best use of scarce resources to generate the highest possible 
total contribution. 
Drawback : Might ignore qualitative factors like strategic importance of some 
customers or long-term market positioning.