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Dear John,
I am facing problem even I learnt it from your npv lectures!The operating profits:
year0: $42
year1: $51
year2: $60
year3: $69
year4: $78Interests:
year0: $2000
year1: $11000
year2: $8750
year3: $6500
year4: $4250Debts:
year0: nil
year1: $75000
year2: $50000
year3: $25000
year4: nilEquity:
year0: $200,000
year1: $215,000
year2: $234,219
year3: $257,657
year4: $285,313Short term debt:
$10000 @ 10%Non-current assets:
$180,000What is ROCE ratio for each of 4 years?
However I guess its only work 1 or 2 marks but they have given the answer that is totally upto my mind 🙁
Many Thanks
I am not sure exactly what you are asking.
The ROCE is the operating profit / total long-term capital (equity + debt)
So for the current year it is 42000/200,000 = 21%
For year 1 it is 51000/(215000 + 75000) = 17.6%
For year 2 it is: 60,000 / (234219 + 50000) = 21.1%and so on….. 🙂
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