Question 1

A company has an Operating Profit (Profit before interest and tax) of $150,000. Its Total Assets are $1,200,000 and Current Liabilities are $200,000. What is the Return on Capital Employed (ROCE) percentage? (Enter number only, round to 1 decimal place)

Accepted Answer

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

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Using Profit after tax instead of Operating Profit, or failing to deduct current liabilities from total assets.

A company has an Operating Profit (Profit before interest and tax) of $150,000. Its Total Assets are $1,200,000 and Current Liabilities are $200,000. What is the Return on Capital Employed (ROCE) percentage? (Enter number only, round to 1 decimal place)

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA FA — Financial Accounting Practice Exam 2

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