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Q. Define Return on capital employed?
Return on capital employed (ROCE) is as well called accounting rate of return. Distinctly IRR ROCE uses average annual accounting profit before interest and tax in the evaluation of investment projects expressing this as a percentage of the amount of capital invested. The verdict as to whether a project is acceptable is made by comparing project ROCE with a target ROCE such like a company's current ROCE.
The problem with utilizing accounting profit rather than cash flow is that only cash flow is linked directly to an increase in company value. ROCE as well ignores the time value of money. For the reason that it averages accounting profit over the life of the project the amount of profit in a given year is irrelevant ROCE consequently ignores the timing of accounting profits.
ROCE as well suffers from definition problems as there are several definitions in common use and so care must be taken to ensure comparisons are made using identical definitions. Capital invested is able to be defined as initial capital invested or average capital invested but other definitions are met in practice.
Suppose Real Option Inc. has a product that generates the following cash flow. At t=1, the demand can be high or low with equal probability. If demand is high (low) the cash flo
INTER-COMPANY TRANSACTIONS AND BALANCES As the associate company is not consolidated, care should be taken when there are trading transactions and inter-company balances between
Q. Dividends in arrears on cumulative preferred stock a. are shown in stockholders' equity of the balance sheet. b. must be paid before common stockholders can receive a dividend.
what is the definition?
What role does accounting play in the planning, implementation, analysis of CSR in particular and organizational strategies in general?
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Calculate breakeven in sales units and in sales value: Tycoon makes and sells 600 toy cars per month. Each toy car is sold for RM40 each. Tycoon is currently producing at 50
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THE INCOME STATEMENT It shows the financial performance of the company during the given financial period. It discloses the income and expenses and thus the net profit for the per
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