PEV - Section 2

Jay

Hi,

Is it just me or does everyone have a problem with section 2 on the PEV papers. More specifically analysing the ratios.

I always seem to make the wrong call! I read everything, have learnt the responses to the ratios but just when I think I have it the answer booklet comes up with something different.

If you need to make the call to a) invest or b) not to invest and the model answer says not, and you go the other way, would you still get credit if you supported your answer with a valid argument. Would you still pass??

Any thoughts???

Jay....

Marg22

Hi Jay

Yes, you are correct in thinking that most people have problems with section 2.

The deciding factor when making a decision on whether to invest or not should be the ROCE or RONE.

ROCE = Return on Capital employed
RONE = Return on Net Equity

This is expressed as a % and it tells you how much operating profit is being generated from the capital employed or net equity.


If say the wrong decision is made and you back it up and there is logic behind the reason then I think partial credit can still be given.

Hope this helps a little.


Good luck for Monday

Jay

Thanks Marg

I think I have revised everything at least a dozen times and its all getting a bit churned up!

It's good to know that partial credit will be given even if I make the wrong call and there may still be enough points to scrap a pass.

Cheers
Jay