Return On Capital Employed And Return On Equity Employed
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Celtic Angel
Registered Posts: 17 New contributor 🐸
Can anyone clarify for me the following
Return on Capital Employed = Profit before tax and interest / Equity plus Long Term Loans all multiplied by 100 to get a percentage  is this correct?
Return on Equity = Profit before tax and interest/Equity multiplied by 100 to get a percentage  is this correct as an answer to a question I had yesterday indicated that the profit figure you use is before tax BUT after interest  can someone tell me which one is correct as now getting a little bit confused!:confused1:
Return on Capital Employed = Profit before tax and interest / Equity plus Long Term Loans all multiplied by 100 to get a percentage  is this correct?
Return on Equity = Profit before tax and interest/Equity multiplied by 100 to get a percentage  is this correct as an answer to a question I had yesterday indicated that the profit figure you use is before tax BUT after interest  can someone tell me which one is correct as now getting a little bit confused!:confused1:
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Your quote:Return on Equity = Profit before tax and interest/Equity multiplied by 100 to get a percentage
Return on Equity = Profit after tax and interest/Equity multiplied by 100 to get a percentage
Afterall we are looking for how much the shareholders have had as a return on their investment, and they don't get their money until the interest has been paid and the tax determined.Sandy
sandy@sandyhood.com
www.sandyhood.com0 
Thanks Sandy
I'll now attempt to reteach myself that equation LOL
I assume the one I had for Capital Employed was correct?
I failed the DFS exam on section 2 in June and am driving myself nuts trying not only to learn the ratios but also to fully understand what they are but sometimes I lose the logic thread  thanks for your help0
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