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:
- 29.00
- 10.85
- 38.46
- 9.69
- 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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