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SSC Financial and Cost Accounting P-1 QUESTION #6118
Question 1

Financial data: Profit from operations $125,000; Profit for year $116,000; Shareholders' equity $423,000; Long-term loan $80,000; Current liabilities $45,000. What is the ROCE?

  • 21.17%
  • 22.81%
  • 23.06%
  • 24.85%✔️
Correct Answer Explanation

Option D (24.85%) is correct.

ROCE = Profit from operations ÷ Capital Employed × 100

Capital Employed = Shareholders' equity + Non-current liabilities = $423,000 + $80,000 = $503,000

(Current liabilities are excluded from capital employed.)

ROCE = $125,000 ÷ $503,000 × 100 = 24.85%