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Return on capital employed

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Return on capital employed

  • This topic has 1 reply, 2 voices, and was last updated 10 years ago by John Moffat.
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  • July 18, 2015 at 8:03 pm #261078
    SOUD SAEED
    Participant
    • Topics: 28
    • Replies: 27
    • ☆☆

    Hello Mr Moffat,

    In inorder to calculate return on capital employed, earning before tax and interest has to be calculated first. Suppose in the income statement, there are 2 elements,

    1) Finance cost- (interest on loans and other finance cost)
    2) Finance income- (interest on deposits and related parties)

    Should minus back the finance income from the earning before tax and interest?

    July 19, 2015 at 8:47 am #261088
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54748
    • ☆☆☆☆☆

    You should use the operating income – so you would remove the finance income

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