sir,
When calculating PBIT to find ROCE.What are the interest expenses that we should INCLUDE in Profit before tax to get PBIT.
EG:
operating profit:$2000000
Finance costs
1.loan $300000
2.overdraft $10000
3.lease $290000
profit before tax:$1400000
so what is the PBIT?
ANS:PBIT=$1990
note:for the purpose of calculating ROCE and gearing,all finance obligations are treated as long term interest gearing borrowings.
Ask the Tutor ACCA FM
Ratio analysis
7y ago#1I am not sure what you are asking because you seem to have answered your own question :-)
PBIT is profit before interest and tax, so you need to add back to the profit before tax all the interest on long-term borrowings (i.e. the loan and the lease (because lease payments are treated the same way as interest on long-term borrowings).
This topic is locked — no new replies.