CAIE A-Level Business A2 Formula Reference Profitability Ratios Topic Practice

Refer to Table 1.2 and lines 41-66.

Calculate the forecast return on capital employed (ROCE) for the year ending 31 May 2024.

Indicative content

Responses may include:

ROCE = Profit from operations / Capital employed X 100

And/or

Capital employed = issued shares + reserves + non-current liabilities (1)

CE=1+2+2=5(2)

ROCE $=0.2 / 1+2+2 \times 100$ (3)

ROCE = 4\% (4)

OFR

Alternatives

$0.1 / 5 \times 100=2 \%(3)$ [profit for the year rather than operating profit]

For example

$0.2 / 3 \times 100=6.7 \%$ (3) [reserves not included in CE]

$0.2 / 4 \times 100=5 \%(3)$ [issued shares not included in CE]