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How to calculate ROCI

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November 7th 2014 AN ACCA USER 120 Points 1 Flag

2 Replies

+1 Vote

Hi,

ROCI is = (PBIT / CE) *100.

PBIT = Profit Before Interest and Tax

CE = Capital Employed

In theory CE is:

Equity (Eq) + Non-Current Liabilities (NCL).

There is another way to represent CE. If you consider the equation:

NCA + CA = Eq + NCL + CL then

NCA + CA - CL = Eq + NCL

So CE is also Non-Current Assets + Current Assets - Current Liabilities.

ROCE says, in % terms, how profit was generated by each £ 1 of CE.

Hope this can help you.

March 1st 2015 AN ACCA USER 950 Points
0 Votes

P.B.I.T/CURRENT LIABILITY*1005. THAT IS YOUR PROFIT BEFORE INTEREST AND TAX ON YOUR PROFIT AND LOSS STATEMENT DIVIDED YOUR CURRENT LIABILITIES ON YOU STATEMENT OF FINANCIAL POSITION MULTIPLY BY 100%.

January 13th 2015 AN ACCA USER 140 Points
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