Question 1

Section A

TransGlobal Logistics has the following financial data for the year:
Operating profit (Profit before interest and tax): $450,000
Finance costs: $50,000
Tax expense: $80,000
Total Equity: $1,200,000
Non-current liabilities: $800,000
Current liabilities: $300,000

Calculate the Return on Capital Employed (ROCE) as a percentage. (Enter the number only, rounded to one decimal place, e.g., 15.5)

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

Using Profit after tax instead of Operating Profit, or including current liabilities in Capital Employed.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA FA — Financial Accounting Practice Exam 5

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