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Calculating ROCE??

LenaLena Settling In NicelyRegistered Posts: 15
Hi all, I am wondering if anyone could help me.

I had results for my unit 31 simulation, it seems that I made a mistake in calculating ROCE.
The assessor said I did not calculate it correctly as I used the end of year capital instead of finding out the average capital for my ROCE.
I thought that I am supposed to use the end of year capital employed for calculating ROCE??

I googled the problem and found out (on wikipedia, hmmm...) that "ROCE uses the reported (period end) capital numbers; if one instead uses the average of the opening and closing capital for the period, one obtains Return on Average Capital Employed (ROACE)".

My understanding is, unless the task asked specifically for ROACE, I was right in applying end of year capital to calculate ROCE...?

What do you think?

Comments

  • coojeecoojee Experienced Mentor Registered Posts: 794
    From memory, the task asks you to calculate the ROCE using average capital employed and that's why you were marked wrong. Personally I'd allow it but that's where assessors can differ in exercising their judgement.
  • LenaLena Settling In Nicely Registered Posts: 15
    Thanks a lot, coojee!

    So, I should have calculated average capital employed...
    But, unless they specifically ask for it, should I still use the end of year capital employed to calculate ROCE?
  • coojeecoojee Experienced Mentor Registered Posts: 794
    Lena wrote: »
    Thanks a lot, coojee!

    So, I should have calculated average capital employed...
    But, unless they specifically ask for it, should I still use the end of year capital employed to calculate ROCE?

    Yes, unless they specifically say use average capital employed then use year end CE.
  • LenaLena Settling In Nicely Registered Posts: 15
    coojee, thanks a lot for your help.
  • BudgieBudgie Feels At Home Registered Posts: 56
    Hey Lena, personally I would ask them to look at this again if the question doesn't specifically ask for average capital. If you answered the question as it was presented, then you shouldn't be marked down for it. It looks to me like the question is not clear.
  • coojeecoojee Experienced Mentor Registered Posts: 794
    Budgie wrote: »
    Hey Lena, personally I would ask them to look at this again if the question doesn't specifically ask for average capital. If you answered the question as it was presented, then you shouldn't be marked down for it. It looks to me like the question is not clear.

    It does specifically ask for average capital employed.
  • BudgieBudgie Feels At Home Registered Posts: 56
    coojee wrote: »
    It does specifically ask for average capital employed.

    Hi coojee, the impression I'm getting from Lena is that the question didn't ask for average capital employed, and this led her to believe that year end capital was required. Sorry if I've misunderstood this! Lena?? :)
  • coojeecoojee Experienced Mentor Registered Posts: 794
    Budgie wrote: »
    Hi coojee, the impression I'm getting from Lena is that the question didn't ask for average capital employed, and this led her to believe that year end capital was required. Sorry if I've misunderstood this! Lena?? :)

    If it's the paper I'm thinking of then it does ask for average capital employed, lots of students miss it though. I can't see why as it says in brackets right after calculate ROCE "using average capital employed"

    The only other 2 live papers don't ask for average capital employed. So if it was one of those papers that Lena sat then she shouldn't have been marked down for it.
  • LenaLena Settling In Nicely Registered Posts: 15
    Hi Budgie, coojee, to be honest I don't remember whether the task did ask for "average" capital employed or not (I thought it did not, but it could be my mistake of not noticing the "average", very possible, of course).

    I sent e-mail to my assessor a few days ago to clarify this and am waiting for her reply...

    coojee, I think I should not discuss live papers on a public forum, but could I maybe send you a PW with the simulation name?
  • coojeecoojee Experienced Mentor Registered Posts: 794
    Lena wrote: »

    coojee, I think I should not discuss live papers on a public forum, but could I maybe send you a PW with the simulation name?

    Yes, that's fine. I nearly put the sim number in my last message and then thought better of it.
  • SparklySparkly Well-Known Registered Posts: 139
    I was glad to have read this post as I sat unit 31.1 yesterday and this post made me aware to read the question very carefully!
    Thank you!
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