ROE vs ROCE
1. ROE =Net profit/Total Equity
Measures d return co is generating for shareholders & efficiency of how it uses d funds
Asian paints ROE for 3yrs is 28%
means it is sensible to retain earnings than pay dividends.Infosys did 4 a long time & Berkshire does til date

ROCE =EBIT/Capital Employed
measure of how efficiently co utilises all available capital (equity +long term debt). For Telecom, capital goods which hv higher gestation period,ROCE is a better measure
Payback -If ROCE is 33% it means total capital of d co has a payback of 3yr

Ideal way is to look at ROE & ROCE together.
When ROCE >ROE it means co has made intelligent use of debt to reduce overall cost of capital. However when the gap between ROCE & ROE is very large it means that debt holders r being rewarded better than the equity shareholders.

Warren Buffett says that both the ROE and the ROCE should be above 20%. The closer they are to each other, the better it is and any large divergences between ROE and ROCE is not a good idea !