Ratios for FNST
guinea pig
Registered Posts: 402 Dedicated contributor 🦉
Good morning all,
I'm finding it confusing that there are several ways to calculate some of the ratios;
Gearing can be either;
total debt ÷ total debt + equity, x 100, or,
long term debt ÷ long term debt + equity, x 100
ROCE return on capital employed can be;
Operating profit ÷ capital employed, x 100, or
Profit after tax ÷ shareholders funds, x 100 (technically return on shareholders funds)
Anyone find this is a problem in an exam? or am I overthinking?
GP
I'm finding it confusing that there are several ways to calculate some of the ratios;
Gearing can be either;
total debt ÷ total debt + equity, x 100, or,
long term debt ÷ long term debt + equity, x 100
ROCE return on capital employed can be;
Operating profit ÷ capital employed, x 100, or
Profit after tax ÷ shareholders funds, x 100 (technically return on shareholders funds)
Anyone find this is a problem in an exam? or am I overthinking?
GP
0
Comments
-
I would of thought in the exam it would tell you how Gearing / ROCE is calculated, however if it isn't just show how you have calculated it and apply the same to each company so a valid analysis can be made. The stock way I would calculate these would be:
Gearing:
Debt / Captial Employed (Debt = Long Term Liabilities, Cap Employed = Equity + Long Term Liabilities)
ROCE:
Operating Profit / Capital Employed (Op. Profit = Profit Before Interest & Tax)0 -
Hi,
According to my notes from FNST (BPP bks) its:-
ROCE
profit from op / (equity + non-current liab) * 100 = ?%
Gearing
Non-current loan / (equity +.non-current liab) = ?times
Hope this helps!0 -
The gearing ration can be either total debt or long term debt but the exam is clear about which one to use. ROCE is operating profit over capital employed.
Nicola0 -
Many thanks, for your helpful replies,
Have a good weekend all,
GP0
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