Return on net assets

Esme

I'm attempting June 09's exam and am stuck on 2.1avii.

Is return on net assets the same as ROCE?

If it is then how do I calculate operating profit? If it's not.. how do I calculate it?

Thanks in advance x

lorrydee

Hi

Yes they are one and the same....

To work out your Operating Profit......

SALES less COST OF SALES = GROSS PROFIT

GROSS PROFIT less Marketing/Distribution/Admin costs = OPERATING PROFIT or PROFIT BEFORE TAX

Hope this helps?

Esme

Brilliant.. thanks!

SandyHood

Net assets is a clear definition but watch out, Capital Employed is not always the same.
Where there are long term liabilities they make the difference.
PEV will examine RONA, and so will MAC (they will not test ROCE)

Net current assets + fixed assets = Capital Employed

Net current assets + fixed assets - long term liabilities = Net Assets