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In calculation ROCE in the following question why do we not add interest to arrive at PBIT?
EXTRACTS FROM THE STATEMENTS OF PROFIT OR LOSS TO 30 APRIL
20X9 20X8
$’000 $’000
Sales 11,200 9,750
Cost of sales 8,460 6,825
Net profit before tax 465 320
This is after charging:
Depreciation 360 280
Loan note interest 80 60
Interest on bank overdraft 15 9
Audit fees 12 10An exam question will most often give you the numerator (profit) figure for a ROCE calculation from last year.
Personally, I would have added back the interest to arrive at PBIT.
I cannot comment on why BPP haven’t done so (if in fact they haven’t)
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