- This topic has 1 reply, 2 voices, and was last updated 2 years ago by
.
- Posts
For exams, we use the closing figure for capital in SOFP for ROCE but opening figure for ROI unless we’re told differently in the question. Is this correct?
In exams, it is generally recommended to use the closing figure for capital in the Statement of Financial Position (SOFP) when calculating Return on Capital Employed (ROCE).
This is because the closing figure reflects the assets and liabilities at the end of the period, which is more relevant for assessing the efficiency of capital utilisation.
However, for Return on Investment (ROI), the opening figure for capital is typically used unless stated otherwise in the question. The rationale behind using the opening figure for ROI is that it represents the assets at the start of the year that generated the profits for the year.
It is important to note that these conventions may vary in practice, but for exam purposes, it is advisable to follow these guidelines unless instructed otherwise in the question.
- You must be logged in to reply to this topic.