BPP Practice and Revision Kit. MCQ Question 93

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August 9, 2016 at 9:37 am #332176
acca9
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In using return on capital employed, the depreciation is deducted from the cash flows. Why is this?
August 9, 2016 at 2:59 pm #332213
John Moffat
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Because ROCE is operating profit as a % of the capital invested.

Operating profit is after charging depreciation. (Cash flows do not include depreciation because it is not a cash flow.)
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