Question 1

An automotive manufacturer has an Operating Profit (Profit Before Interest and Tax) of $600,000. Its total equity is $2,000,000 and its non-current liabilities are $1,000,000. What is the Return on Capital Employed (ROCE) as a percentage? (Enter the number only, without the % sign)

Accepted Answer

ROCE = (Operating Profit / Capital Employed) * 100. Capital Employed = Total Equity + Non-Current Liabilities.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Dividing by Equity only (giving 30%) or dividing by Total Assets without deducting current liabilities.

An automotive manufacturer has an Operating Profit (Profit Before Interest and Tax) of $600,000. Its total equity is $2,000,000 and its non-current liabilities are $1,000,000. What is the Return on Capital Employed (ROCE) as a percentage? (Enter the number only, without the % sign)

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA FA — Financial Accounting Practice Exam 4

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