why are these finianical perfromance formulas not working please?

Hello everyone ,

I am trying to do these two formulas:

ROCE and ASSET turnover but my answer is not agreeing with the book:

i get

ROCE : 625 / 2840+2520 (Operating profit / non current assets + net assets) = 11.66% book gets 22.2% by not including the net assests for some reason??

Asset turnover

i get: (Turnover / non current assets + net assets) = 2500 /2840+2520 = 0.46 times where as the book gets 0.88 times again not including the net assets why ??!

cany anyone help please?




  • SamiH
    SamiH Registered Posts: 179 Beyond epic contributor 🧙‍♂️
    ROCE is the same as Return on Net Assets,. so its 625/2840 = 22%

    Asset Turnover is Turnover/Net Assets so its 2500/2840 = 0.88 Times

    Your Net asset figure already includes your non-current assets, so you shouldn't add them in.


    In the case above:

    Non Current Assets + Current Assets - Non Current Liabilities = Net Assets
  • SandyHood
    SandyHood Registered, Moderator Posts: 2,034 mod
    SamiH provided a perfect answer. This is a little bit more which I hope also helps.

    ROCE = = Operating ProfitROCE nn = nnnnnnnnnnnnm= £625ROCE = = nnnnnnnnn£625nnnnnn= nn 22%
    ROCE = Total assets - Current liabilitiesnnnnnnnnn £2520 +£370 - £50Rnnnnnnnn = £2840

    SamiH is absolutely right (in this case) ROCE is the same as ROCEbut watch out for questions where there are long-term liabilities as they are also part of capital employed (evenif they are not part of net assets)
  • topcat
    topcat Registered Posts: 452
    Thank you both very much this helps clear it all up , have a nice weekend :)
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