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Hi Ken / all,
Q1 of September’s sitting asked for a recalculation of ROCE as it had been calculated incorrectly in the scenario. Looks straightforward. But on analyzing the official ACCA Answers, the marks seemed to have been awarded only for using “average capital employed” over the year as the denominator. I had always thought that “Return on Average Capital Employed” was a standalone ratio in it’s own right. I’m confused why it was required here when what was asked for was ROCE. No mention in the Answers of awarding marks for using only End of year Capital i.e. the traditional ROCE denominator.
Any thoughts please?I would have used year end capital employed. I’m sure credit would be given for that. Besides, in this case there would be little difference in the answers.
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