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Deferred Tax impact on ROCE

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Deferred Tax impact on ROCE

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  • July 31, 2023 at 9:07 am #689182
    danwilkinson93
    Participant
    • Topics: 10
    • Replies: 5
    • ☆

    Hi – it doesn’t affect profit before tax but how does it affect capital employed?
    Thanks

    July 31, 2023 at 6:09 pm #689199
    Stephen Widberg
    Keymaster
    • Topics: 15
    • Replies: 3355
    • ☆☆☆☆☆

    Everyone calculates ROCE differently, but one view might be:

    CE = interest bearing liabilities + equity

    DT:

    1. Would change equity – for example a DT expense of 10 will reduce RE and therefore equity.
    2. No impact on interest bearing liabilities.

    🙂

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