A Level Accounting (9706)•9706/12/O/N/18
Explanation
ROCE = PBIT / Capital Employed Steps:
- Extract PBIT from financial statements: 34,500.
- Extract capital employed: 150,000.
- Divide PBIT by capital employed: 34,500 ÷ 150,000 = 0.23.
- Convert to percentage: 0.23 × 100 = 23%.
Why B is correct:
- ROCE formula is (profit before interest and tax ÷ capital employed) × 100, directly yielding 23% here.
Why the others are wrong:
- A: Understates ROCE; assumes lower PBIT (e.g., 33,000) or higher capital employed.
- C: Overstates ROCE; assumes higher PBIT (e.g., 48,000).
- D: Overstates ROCE; assumes slightly higher PBIT (e.g., 46,500).
Final answer: B
Topic: Analysis and communication of accounting information
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