why are these finianical perfromance formulas not working please?
topcat
Registered Posts: 452
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?
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?
0
Comments
-
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.
Edit:
In the case above:
Non Current Assets + Current Assets - Non Current Liabilities = Net Assets0 -
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)Sandy
sandy@sandyhood.com
www.sandyhood.com0 -
Thank you both very much this helps clear it all up , have a nice weekend0
Categories
- All Categories
- 1.2K Books to buy and sell
- 2.3K General discussion
- 12.5K For AAT students
- 319 NEW! Qualifications 2022
- 162 General Qualifications 2022 discussion
- 11 AAT Level 2 Certificate in Accounting
- 56 AAT Level 3 Diploma in Accounting
- 87 AAT Level 4 Diploma in Professional Accounting
- 8.8K For accounting professionals
- 23 coronavirus (Covid-19)
- 272 VAT
- 92 Software
- 273 Tax
- 135 Bookkeeping
- 7.2K General accounting discussion
- 200 AAT member discussion
- 3.8K For everyone
- 38 AAT news and announcements
- 345 Feedback for AAT
- 2.8K Chat and off-topic discussion
- 582 Job postings
- 16 Who can benefit from AAT?
- 36 Where can AAT take me?
- 42 Getting started with AAT
- 26 Finding an AAT training provider
- 48 Distance learning and other ways to study AAT
- 25 Apprenticeships
- 66 AAT membership