Activity 8 - ROCE and the Pyramid
Let's put some numbers in the pyramid now to prove what we have just said.
We've already see the ROCE in action with the Carphone Warehouse and Vodafone so why not go to the database of companies that goes with series and choose another company to work with? Here's a template for you:
| _________________________ plc Consolidated Profit and Loss Account |
||
|---|---|---|
| £'000 | £'000 | |
| Turnover | ||
| Profit for the financial period | ||
| Equity shareholders' funds | ||
Fill in the figures in the template below and then do the arithmetic:
Now that you have the ratio values, prove to your own satisfaction that
ROCE = Profit Margin * Asset Turnover.
Additional notes are available on advanced rate of return or you can move on to the Liquidity section.
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