How to work out the return on capital emplyed please?

topcat

Hi everyone,

I am trying to work out the Return on Capital Employed for Staylite LTD

I know the formula for ROCE is

operating profit

---

Non current assents + net current assets X 100%

but i am getting the wrong percentage compared to the answer

I am doing

3,467

---

600+198-182

which is 5.62%

a bit off the answer of 65.4%


Untitled by AdamSWilkinson, on Flickr

tillyjbc

Hi Topcat! Use Operating Profit, not Gross Profit for ROCE. 403 / 616 x 100 = 65.42%

kkelly

Hi Topcat,
Your on the right line. R.O.C.E. is Operating Profit/ Total Equity + Non-Current Liabilities * 100%
which from the question is 403 / 616 * 100% = 65.4% The 616 is 450+166!
Hope this helps!
Kevin

topcat

thank you both i was being blind and looking at the wrong figure for the top half of the equation :blushing:

you have saved me pulling any more hair out