A Level Accounting (9706)•9706/11/M/J/18
Explanation
Insufficient information to calculate ROCE Steps:
- ROCE = (operating profit ÷ capital employed) × 100%, where operating profit excludes exceptional items.
- Operating profit = profit before interest + loss on disposal (add back exceptional loss) = 48,500 + 3,250 = 51,750.
- Capital employed = equity (ordinary share capital + share premium + retained earnings) = 65,000 + 7,500 + 35,000 = 107,500, assuming no non-current liabilities.
- Full balance sheet data (liabilities or assets) is missing, preventing accurate capital employed determination; provided data yields ~48%, not matching options.
Why B is correct:
- Not enough information to compute ROCE precisely.
Why the others are wrong:
- A: Understates by ignoring full equity or using net figures.
- C: Overstates by excluding reserves or using gross profit.
- D: Overstates further by limiting denominator to share capital only.
Final answer: B
Topic: Analysis and communication of accounting information
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