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Hi Mr Moffat,
Can I be clarified? ROCE has different formulas as I encountered using the BPP revision kit.
ROCE= EBIT/
Long-term funds *in which Long term funds could either be:
* long term liabilities plus equity
or
*total assets less current liabilitiesAnother one is:
ROCE = Average Annual Profits/Average Investment
in which ave annual profits = total profits / # years
and average investment = (initial investment + scrap value)/2
Are there any differences between the two?
They are both the same.
The only question is as to whether you use opening long-term capital, or closing long-term capital, or average long-term capital.
As to which to use, it depends on what is required in the question and what information is given in the question.
I do explain this in my free lectures.
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