Financial data: Profit from operations 59,800; Finance costs 12,000; Profit for year 47,800; Ordinary share capital 700,000; Retained earnings 72,500; 10% Debentures 120,000. What was the ROCE?

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SSC Financial and Cost Accounting P-1 QUESTION #6148

Question 1

Financial data: Profit from operations $59,800; Finance costs $12,000; Profit for year $47,800; Ordinary share capital $700,000; Retained earnings $72,500; 10% Debentures $120,000. What was the ROCE?

5.36%
6.19%
6.70%✔️
7.74%

Correct Answer Explanation

Option C (6.70%) is correct.

Capital Employed = ($700,000 + $72,500) + $120,000 = $892,500

ROCE = $59,800 ÷ $892,500 × 100 = 6.70%

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