ROCE Mock Exam Q

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December 8, 2015 at 6:21 pm #289235
alawi sayed
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Hello Sir,

from a mock exam

the following ratios have been calculated for a company

Gross profit margin 28%
Operating profit margin 15%
Gearing (Debt/Equity) 30%
Asset turnover 60%

what is the return on capital employed for the company

The answer is 9%
Can you help clarify please,

Thanks
December 9, 2015 at 8:09 am #289446
John Moffat
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You really should watch the free lectures.

It is very standard in F5 (and in F2 and F3) that the ROCE = asset turnover x operating profit margin.

60% x 15% = 9%
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