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why it's incorrect: ROCE

Forums › ACCA Forums › ACCA FM Financial Management Forums › why it's incorrect: ROCE

  • This topic has 0 replies, 1 voice, and was last updated 6 years ago by amysnowy.
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  • April 16, 2019 at 8:56 pm #513164
    amysnowy
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    • Topics: 72
    • Replies: 25
    • ☆☆

    is below sentence incorrect to describe ROCE?

    ROCE can be defined as profit before interest and tax divided by the sum of shareholders’ funds and prior charge capital.

    my understanding about prior charge capital is long term liability, which is non- current liabilities. isn’t correct?

    what is interest-bearing finance? how should I understand ” capital employed is measured as equity plus interest-bearing finance, i.e. the long-term finance supporting the business. This usually includes all lease liabilities, whether they are shown as current or non-current”. Should it elaborate as equity + non-current liabilities?

    if so, prior charge capital = interest-bearing finance = non – current liabilites?

    Thanks

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