Question 1

A company has Profit Before Interest and Tax (PBIT) of $450,000. Its total assets are $3,500,000 and its current liabilities are $500,000. What is the Return on Capital Employed (ROCE) percentage? (Enter the number only, rounded to one decimal place)

Accepted Answer

Calculate Capital Employed as (Total Assets - Current Liabilities). Then divide PBIT by Capital Employed and multiply by 100.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Using Total Assets instead of Capital Employed as the denominator, or using Profit After Tax instead of PBIT.

A company has Profit Before Interest and Tax (PBIT) of $450,000. Its total assets are $3,500,000 and its current liabilities are $500,000. What is the Return on Capital Employed (ROCE) percentage? (Enter the number only, rounded to one decimal place)

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA FA — Financial Accounting Practice Exam 3

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