Is it true?

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February 17, 2021 at 1:13 pm #610751
AshleyMarc1997
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Is it true that in return on capital employed under operating cashflows we need to deduct depreciation, but in operating profits depreciation was already deducted so no need to deduct them again
February 17, 2021 at 4:15 pm #610769
John Moffat
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Yes, it is true!
Operating profit is after charging depreciation. Depreciation is not a cash flow and so the operating cash flow is before charging depreciation.
The ROCE is a profit measure and so uses the operating profit (which is after depreciation).
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