Wood Sparrow Ltd has provided a list of its assets and liabilities as at 31 December 2017 as follows:
- Long-Term Assets £0.8M
- Inventory £0.7M
- Accounts Receivables £0.7M
- Bank Account £0.4M
- Cash £0.1M
- Accounts Payable £0.9M
- Long-term Bank Loan £2M
- Reserves £0.5M
- Share Capital £0.5M
- Revenue £10.8M
- Cost-of-Sales £9M
- Net Profit Margin £1M
- Purchases £5.1M
What is Wood Sparrow’s ROCE percentage?
Select ONE answer:
- 20.00
- 7.4
- 33.33
- 9.26
- 16.66
Show your workings to arrive at your answer, and explain and justify your reasons:
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
This is multiple choice question is suitable for Accounting KS5 classes.
The answer is 3 – Return on Capital Employed. Return on capital employed or ROCE is a profitability ratio that measures how efficiently a company can generate profits from its capital employed by comparing net operating profit to capital employed. £1M / (£2M + £0.5M + £0.5M) * 100 = 33.33%
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