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

Calculate capacity of the system, Cookie company is open for all day and ni...

Cookie company is open for all day and night, 24 hrs. Enough demand exists to keepthe cookie company busy 24 hrs. Assume you have: (i) One oven which can accommodate one tray

Global environment, what are the issues in a global environment

what are the issues in a global environment

strategy options for an organization, a) Use modelling tools to make strat...

a) Use modelling tools to make strategy options for an organization. b) Make a comparative understanding of activity from organizations in the market. c) Make options to form the

How to solve complex econometric question, I have problem in subject econom...

I have problem in subject econometrics, how i get solved questions in econometrics.

Beyond budgeting, A philosophy that believes traditional or conventional bu...

A philosophy that believes traditional or conventional budgeting methods are of little use to management, however beyond budgeting does not believe that budgeting within organisati

Advantages and disadvantages of the formal/rational approach, RF and JT are...

RF and JT are both former international rugby players who, when they retired, formed their own business, WFH Trading Company.  The company that they established at first manufactur

Decision making process, In management strategic decision making involves g...

In management strategic decision making involves great complexity, uncertainty and risk.  Describe the strategic decision making process and consider the effects of bounded rationa

Principles of hyper competitive strategies., how might the principles of hy...

how might the principles of hyper competitive strategy b apllied to a fashion retailing industry

Strategic management in a global environment, 1. Read "The Global Branding ...

1. Read "The Global Branding of Stella Artois" in page 244 to 258, and answer the following questions: a) Develop a 5-forces analysis of the beer industry, noting whether the force

Develop a strategy for an organisation, Design a comprehensive Change Manag...

Design a comprehensive Change Management Strategy for your organisation/division/unit and with that (strategy) make sure that organisational diagnosis/analysis are addressed and cr

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