Accounting Multiple Choice Question – 17 July 2018

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

Wood Elf Ltd has provided a list of its assets and liabilities as at 31 December 2017 as follows:

  • Long-Term Assets £1.8M
  • Inventory £2.7M
  • Accounts Receivables £1.5M
  • Bank Account £0.4M
  • Cash £0.1M
  • Accounts Payable £2.9M
  • Long-term Bank Loan £4M
  • Reserves  £1.5M
  • Share Capital £1.0M
  • Revenue  £25.8M
  • Cost-of-Sales  £20.0M
  • Net Profit Margin  £2.5M
  • Purchases  £11.5M

What is Wood Elf’s ROCE percentage?

Select ONE answer:

  1. 29.00
  2. 10.85
  3. 38.46
  4. 9.69
  5. 22.48

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.  £2.5M / (£4M + £1.5M + £1.0M) * 100 = 38.46%

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