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The following information has been taken from the accounts of Dalton Ltd on 31/12/2010: Net Profit: €40,000 Capital Employed: €500,000 Calculate the Return on Capital Employed: (Show your workings.) - Leaving Cert Business - Question 6 - 2011

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Question 6

The-following-information-has-been-taken-from-the-accounts-of-Dalton-Ltd-on-31/12/2010:--Net-Profit:-€40,000-Capital-Employed:-€500,000--Calculate-the-Return-on-Capital-Employed:-(Show-your-workings.)-Leaving Cert Business-Question 6-2011.png

The following information has been taken from the accounts of Dalton Ltd on 31/12/2010: Net Profit: €40,000 Capital Employed: €500,000 Calculate the Return on Capi... show full transcript

Worked Solution & Example Answer:The following information has been taken from the accounts of Dalton Ltd on 31/12/2010: Net Profit: €40,000 Capital Employed: €500,000 Calculate the Return on Capital Employed: (Show your workings.) - Leaving Cert Business - Question 6 - 2011

Step 1

Calculate the Return on Capital Employed:

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Answer

To calculate the Return on Capital Employed (ROCE), we use the formula:

ROCE=Net ProfitCapital Employed×100ROCE = \frac{\text{Net Profit}}{\text{Capital Employed}} \times 100

Substituting the given values:

  1. Net Profit = €40,000
  2. Capital Employed = €500,000

Plugging these values into the formula yields:

ROCE=40,000500,000×100=8%ROCE = \frac{40,000}{500,000} \times 100 = 8\%

Therefore, the Return on Capital Employed is 8%.

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