ACCA · Question 11 · Analyzing and Interpreting Financial Statements
SECTION A
Company X and Company Y operate in the same retail sector. Company X recently revalued its property portfolio upwards by 40%, while Company Y continues to hold its properties at historical cost.
Assuming all other financial metrics are identical, what is the most likely impact of this revaluation on Company X's Return on Capital Employed (ROCE) compared to Company Y?
Answer options:
Company X will have a higher ROCE than Company Y.
Company X will have a lower ROCE than Company Y.
Company X and Company Y will have the same ROCE.
The impact on ROCE cannot be determined without knowing the tax rate.
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