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Hello,
Can you please help me in this question!
Question 91 in Exam Kit BPP, is with finding ROCE.
The depreciation is charged on a straight line, but it wasn’t calculated at all!
Should we always calculate depreciation and subtract it from the Total cash so you can find the Average profit? Or just ignore depreciation as they did in the Exam Kit.For ROCE we take the profits after depreciation. The depreciation is not relevant for question 91 because operating profits are already after charging depreciation.
It is relevant for question 92, which is using the same information and for which we need the operating cash flows which are before depreciation.
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