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ROCE

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › ROCE

  • This topic has 5 replies, 2 voices, and was last updated 7 years ago by MikeLittle.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • November 19, 2015 at 10:21 pm #284058
    jingdong
    Participant
    • Topics: 82
    • Replies: 102
    • ☆☆

    Dear Mike, thank you for your help, now i have a another question, How can ROCE be further analysed into its component ratios?
    A Gross profit margin / net asset turnover
    B Gross profit margin x net asset turnover
    C Net profit margin / net asset turnover
    D Net profit margin x net asset turnover
    the answer is C
    would you please explain to me?
    many thanks
    jingdongyu

    November 21, 2015 at 2:14 pm #284324
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22705
    • ☆☆☆☆☆

    If profit margin is:

    Pbit / Revenue x 100

    And asset / turnover is:

    Revenue / Capital employed

    The ROCE is:

    Pbit / Capital employed and that’s the same as:

    Profit margin / Capital employed

    Does that answer it?

    November 22, 2015 at 7:58 pm #284641
    jingdong
    Participant
    • Topics: 82
    • Replies: 102
    • ☆☆

    Thank you for your help, the answer which BBP gave to me is C, Net profit margin/ net asset turnover, i am very confused, because Net profit margin x net asset turnover= PBIT/Capital employed.
    do you think the answer which BPP gave is wrong, would you please help me.
    many thanks

    November 23, 2015 at 3:52 pm #284735
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22705
    • ☆☆☆☆☆

    My mistake – I’ve typed “/” instead of “*”, but if you’d followed my response you would have realised that it should have been multiplied!

    Where I have typed

    “Profit margin / Capital employed” I should have typed
    “Profit margin * Capital employed”

    Is that better?

    November 23, 2015 at 7:18 pm #284778
    jingdong
    Participant
    • Topics: 82
    • Replies: 102
    • ☆☆

    thank you Sir

    November 23, 2015 at 8:24 pm #284790
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22705
    • ☆☆☆☆☆

    You’re welcome

  • Author
    Posts
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