Illustrate about return on capital employed, Strategic Management

Assignment Help:

Q. illustrate about Return on capital employed?

Return on capital employed (ROCE) 

     =    (Profit before interest and tax (PBIT) / Capital employed) x 100%      

ROCE is also referred to as return on investment (ROI) and return on net assets (RONA).  ROCE measures profitability and shows how well the business is utilising its capital to generate profits.  Capital employed is debt and equity.  Equity means shareholders' funds (shareholders' funds) and debt means noncurrent liabilities.Capital employed can be found from the statement of financial position by taking the shareholders' funds (share capital and reserves) and long term debt.  A low ROCE is either caused by a low profit margin or high capital employed.  A high ROCE is either caused by high profit margin or low capital employed.  It is therefore important to look at the profitability, assets, liabilities and share capital when trying to give reasons for the change in ROCE.


Related Discussions:- Illustrate about return on capital employed

Why should resources be a concern in a global strategy, Why should resource...

Why should resources be a concern in a global strategy

Portfolio analysis, In portfolio analysis, the business views its product l...

In portfolio analysis, the business views its product lines and business units as separate investments, each responsible for producing a positive return. These separate investments

Research and materials analysis, Using a combination of online and paper re...

Using a combination of online and paper resources, find out as much as you can about the seven materials listed below.  In particular, consider the QUANTITATIVE values for their pr

What is the eva for this division, Division Y has annual operating profit o...

Division Y has annual operating profit of £40 million after charging £6 million for the development cost of a new product which has been launched and is expected to last this year

What are the benefits of cause and effect diagram, Question 1: a. List ...

Question 1: a. List out Dr. Edward Deming's contribution to Quality. b. Show the eight dimensions of Quality. Dr. Edward Deming's contribution to Quality. Eight dimen

Create a pivot table, One rich seam of experimental data comes from meteoro...

One rich seam of experimental data comes from meteorological measurements.  Thousands of measurements are recorded each day by the Australian Bureau of Meteorology (BoM). This assi

Value marginal tradeoffs, Problem: Both person A and person B are purchasin...

Problem: Both person A and person B are purchasing bananas and apples from the same supermarket, where the price of a banana is $2 and the price of an apple is $1. Person A is curr

Three stage transformation model of inputs, Product manufacturing operation...

Product manufacturing operations can be described as a three stage transformation model of inputs. Inputs Inputs are intangible. Unlike a traditional product, a servic

Strategic Planning and Organizational Development fo, Question 1: Read the ...

Question 1: Read the article in the assigned Reading, “Management: A Journey in Progress.” Which do you think are the most enduring management principles and management responsibil

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