Accounting Multiple Choice Question – 17 March 2022

In 2020 a company was entirely financed by its equity and reserves which total £1,000,000.

Its return on capital employed (ROCE) was 28%.

On 1 January 2021 the company issued a 10% debenture of £300,000.

During 2021 the profit from operations increased by 20%.

No dividends were paid.

What was the ROCE for 2021?

Select ONE answer:

1. 19.1%
2. 20.9%
3. 23.4%
4. 25.8%

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct ==> 28% of £1M = £280k * 1.2 = £336K / (£1,000K + £300k + £336k)
3. Not correct
4. Not correct

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