A company's profit before interest and tax is KSh 450,000 and its capital employed is KSh 1,500,000. What is the return on capital employed?
Answer and explanation
Correct answer: A. 30%
- Step 1: ROCE = profit before interest and tax / capital employed x 100. Step 2. = 450,000 / 1,500,000 x 100 = 30%. Answer: 30%. Why not the others: 333.33%: That divides capital employed by profit. 3%: That multiplies by 10 instead of 100. 35%: That adds five percentage points to the correct answer.
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