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Questions

Forums › ACCA Forums › ACCA FA Financial Accounting Forums › Questions

  • This topic has 1 reply, 2 voices, and was last updated 6 years ago by John Moffat.
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  • Author
    Posts
  • February 22, 2016 at 8:57 am #301537
    cut3woodyx
    Member
    • Topics: 2
    • Replies: 1
    • ☆

    Hello tuitors, i have a few questions when i am studying F3

    1)the function for return on capital employed is
    Profit/ Capital employed
    but profit is used to calculate capital employed, do we use the capital employed at the start of the year? or do we use the computed profit at the end of the year?

    2)the function for Debt/Equity ratio is
    Fix interest capital(NCL + preference share)/Equity
    do we need to exclude preference share from equity when we are calculating this?

    February 22, 2016 at 7:55 pm #301598
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51576
    • ☆☆☆☆☆

    Firstly, if you want me to answer you must ask in the Ask the Tutor Forum – this forum is for students to help each other.

    However, the answer to your first question is that there is no rule and it depends why it is being calculated. Usually we would use the opening capital employed, but if it is being used to assess the performance of managers (as ROI) then it would usually be the closing capital employed.

    With regard to your second question, yes equity is only ordinary shares and reserves.

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