Hello Sir,
I don't know the difference between Capital Employed and Equity. I'm always confused between "Capital" and "Equity"
Capital Employed = Equity + Long-term liability
Equity = Shares (common + preferences) + Reserves
Am I correct? Do you have lettuce that have explanation of these two? If the questions have a list of assets items, liabilty items, equity items, I am afraid I don't know how to calculate them to apply to ROCE and Grearing ratio.
Please help!!!
Thank you so much!!!!
Ask the Tutor ACCA FM
ROCE vs Gearing Ratio
5y ago#1The two 'equations' that you have written are correct, and these are terms from Paper FA (was Paper F3) which presumably you have already passed or were exempt from.
I do explain the calculations of both the return on capital employed and the gearing ratio (which are obviously two completely different things) in my free lectures.
The lectures are a complete free course for Paper FM and cover everything needed to be able to pass the exam well.
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