# why are these finianical perfromance formulas not working please?

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 ??!

• 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

Edit:

In the case above:

Non Current Assets + Current Assets - Non Current Liabilities = Net Assets
• 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)
Sandy
sandy@sandyhood.com
www.sandyhood.com
• Registered Posts: 452
Thank you both very much this helps clear it all up , have a nice weekend