Return on Capital Employed (ROCE) compares operating earnings with capital employed in the company. Capital Employed has many definitions unfortunately, but, in general it is the capital investment necessary for a business to function. See: http://en.wikipedia.org/wiki/Return_on_capital_employed
We define it as Operating Profit / ( Total Assets Less Current Liabilities ) x 100. There are alternative definitions available in the Screener for ROIC and ROC Greenblatt (based on the strict Magic Formula definition).
A high double digit ROCE often means that the company has a defensible edge versus its competitors (e.g. a strong brand or a unique product).
ROCE is similar to Return on Assets (ROA), but takes into account all sources of financing. Because ROCE measures return against the book value of assets, it's worth being aware that depreciation can flatter ROCE even though cash flow is constant. This is not the case with Return on Invested Capital (ROIC).