June 2007 PEV Section 2

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princess
princess Registered Posts: 80 Regular contributor ⭐
Hi
I am working through section 2 and task 2.1 (v) is asking for RONA
BUT when i looked at the "model answers" they have put ROCE???

Confusing the hell out of me! Can anyone help me?!!!

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  • one-eyed-womble
    one-eyed-womble Registered Posts: 31 Regular contributor ⭐
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    RONA and ROCE are equal to each other. RONA is return on net assets. ROCE is return on capital employed. On the balance sheet, net assets equal capital employed, which is how it balances.

    It's a way of working out exactly the same thing, but it just depends on what information you are given. Sounds to me like it's a typo on the model answers, but it will be the same figure.

    Hope that helps.
  • Khurram Taj
    Khurram Taj Registered Posts: 29 Regular contributor ⭐
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    RONA is Return of Net Assets and ROCE is Return on Capital employed

    So if you want to calculate RONA than apply this:-

    RONA= Operating profit/Net assets x 100

    ROCE= Operating profit/ Capital employed x 100

    Hope it will be helpful for you tomorrow

    Best regards

    Khurram Taj
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