interpretation

Ok thank you but why is pbit of Fatima deducted from capital employed. Isn’t it the the loan amount of 100000 which was used to finance the acquisition to be deducted from capital employed 114000. Why is pbit of Fatima deducted from Capital employed amount of 114000

Harbin financial statements for Y\e sep along with extracts from Chief executive’s report
S.P\L
2017 2016
$000 $000
Revenue 250,000 180,000
C.O.S (200,000) (150,000)
G.P 50,000 30,000
Operating expenses (26,000) (22,000)
Finance costs (8,000) (nil)
P.B.T 16,000 8,000
Income tax expense (at 25%) (4,000) (2,000)
Profit for the year 12,000 6,000

S.F.P
2017 2016
$000 $000

N.C.A 210,000 90,000
P.P.E 10,000 nil
Goodwill 220,000 90,000

Current assets
Inventory 25,000 15,000
Receivables 13,000 8,000
Bank nil 14,000
38,000 37,000
258,000 127,000

Total assets
Equity ans liabilities 100,000 100,000
Equity shares of $1 each 14,000 12,000
Retained earnings 114,000 112,000

N.C.L
8% loan notes 100,000 nil
C.L
Bank overdraft 17,000 nil
payables 23,000 13,000
current tax 4,000 2,000
44,000 15,000
258,000 127,000

Total equity and liabilities

Extract from the chief executives report:

‘Highlights of harbins performance for the year ended 30 september 2017:

An increase in sales revenue of 39%

Gross profit margin up from 16.7% to 20%

A doubling oh the profit for the period

In response to the improved position the board paid a dividend of 10 cents per share in september 2017 an increase of 25% on the previous year’.

You have also been provided with the following further information.

on 1 october 2016 harbin purchased the whole of the net assets of fatima (previously a privately owned entity) for $100million, financed by the issue of $100,000 8% loan notes. The contribution of the purchase to harbins results for the year ended 30 september 2017 was:
$000
Revenue 70,000
C.O.S (40,000)
G.P 30,000
Operating expenses ( 8,000)
P.B.T 22,000
there were no disposals of N.C.A during the year
The following ratios for harbin for sep 2016

return on Y\e capital employed 7.1%
(profit before interest and tax over total assets less current liabilities)
Net asset (equal to capital employed) turnover 1.6
Net profit (before tax) margin 4.4%
Current ratio 2.5
Closing inventory holding period (in days) 37
Trade receivables collection period (in days) 16
Trade payables payment period (based on coast of sales) (in days) 32

Grade (debt over debt plus equity) nil

Required

(a) calculate equivalent ratios for harbin for 2017

(b) Asses the financial performance and position of harbin for the year ended 30 september 2017 compared to the previous year. your answer should refer to the information in the chief executives report and the impact of the purchase of the net assets of fathima
Answer..
in answer part calculation of ratios without fathima…
return on year capital employed
24000-22000/114000-(22000-5.500)
5.500 =25% tax
i still dont get why do we deduct 22000 PBIT from 114000 capital employed