Hi John!
I am having some problem to understand how by reducing capital employed through the repayment of long term debt could result into an increase on ROCE. Could you please explain?
Thanks.
Ask the Tutor ACCA PM
performance measurment
9y ago#1The return on capital employed is profit before interest and tax divided by the long term capital (debt + equity).
If the denominator falls (because debt has been repaid) then the ROCE will increase. Make up some numbers and see what happens then you reduce debt.
Sign into reply to this topic.