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- This topic has 3 replies, 2 voices, and was last updated 2 years ago by John Moffat.
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- September 21, 2022 at 12:39 pm #666911
Sir,
Roce indicates How much profit (before interest and tax) is generated Based on each $ of capital employed in the company in percentage terms right?
September 21, 2022 at 4:07 pm #666930Correct.
September 22, 2022 at 4:54 am #666943So to look this in depth
Asset turnover =
sales/capital employedOperating profit margin = Pbit/sales
The above two formulas could be viewed in two perceptions
1.
Asset turnover indicates us how well an entity converts its capital employed into salesAnd
Operating profit margin indicates us how well an entity converts its sales into profit. (That is profit before interest and tax)
2.
Asset turnover indicates us how much sales is generated Based on each $ of capital employed of the company.And
Operating profit margin indicates us how much profit (before interest and tax) is generated based on each $ of capital employed of the company.
Am I correct master
September 22, 2022 at 8:49 am #666955You are correct (and have you watched my free lectures on this?)
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