Calculate the monetary performance of a firm, Financial Management

Assignment Help:

a) Year 2 ROCE = $400k / $1,000k = 40%

Year 1 ROCE = $360k / $800k = 45%

b) ROCE is an efficiency ratio that measures the monetary performance of a firm compared with the amount of capital invested. In Year 2, JKL returned 40% from the value of the firm, i.e. for every $100 invested in the firm $40 is generated as profit (before interest and tax). The ratio has fallen by 5% suggestive of poorer use of the firm's capital, i.e. deteriorating efficiency. Profitability can be moderate by comparing to bank interest rates (40% is relatively high when compared to any bank deposit rate) or benchmarking against JKL's nearest rivals. The ROCE for both years is likely to be significantly higher than the financial institutions / return from savings offered by banks.


Related Discussions:- Calculate the monetary performance of a firm

Beta, what is the value of beta for this fund ? If the benchmark index for ...

what is the value of beta for this fund ? If the benchmark index for this mutual fund increased by 11.00% during the period covered by beta measure, what was the rate of return for

Settlement of the index options contract, Settlement of the Index Options C...

Settlement of the Index Options Contract In the index options contract, the premium to be paid or to be received is calculated for each CM after netting the positions at the en

Day count convention, Day count convention is a system used to determ...

Day count convention is a system used to determine the number of days between two coupon dates. It is important in calculating accrued interest and present value

Procurement, What is the explanation for leaset cost selection

What is the explanation for leaset cost selection

Investment banker, The Role of Merchant Banker The issuer appoints the ...

The Role of Merchant Banker The issuer appoints the Merchant Banker (or Investment Banker) to undertake the issue activity. A Merchant Banker performs multiple functions during

Accounting principles board, Q. Accounting Principles Board ? Accountin...

Q. Accounting Principles Board ? Accounting Principles Board (APB) -senior technical committee of AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (AICPA) that issued pronoun

Explain the principles of taxation and double taxation, Question 1 ) A Glob...

Question 1 ) A Globalization is a procedure of international integration that arises due to increasing human connectivity as well as the interchange of products, ideas and other ph

Return on equity, Your quantitative analysis will describe the financial st...

Your quantitative analysis will describe the financial strength of you company using the metrics we discussed in class. You may use other measures at your discretion, but the follo

Collateralized mortgage obligations (cmos), Collateralized Mo...

Collateralized Mortgage Obligations (CMOs) CMOs retain many of the yield and credit quality advantages of pass-throughs, while eliminating some of the

Debt finance, Ask queswtion #Minimum 100 words accepted# what are the chara...

Ask queswtion #Minimum 100 words accepted# what are the characteristics of debt finance? What are the similarities and differences between debt finance and ordinary share capital

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd