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Lecture notes FINANCIAL ACCOUNTING (BF1120)
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Return on CapitalEmployed and
Contemporary
Developments in
Presentation title
Financial Reporting
Sub head text
,Learning objectives
At the end of this session you should be able to:
✓ Understand Return on Capital Employed (ROCE)
✓ Discuss the limitations of traditional financial reports
✓ Understand integrated reporting and harmonisation
✓ Discuss the use of integrated reporting and
harmonisation in overcoming the limitations of
traditional financial reports
,Classification of Ratio
Profitability Ratios
Return on capital employed (ROCE)
• Net profit before interest and taxation______ x 100
Share capital + Reserves + Non-current liabilities
Operating profit margin
• Operating profit × 100
Sales revenue
Gross profit margin
• Gross profit × 100
Sales revenue
, Return on capital employed (ROCE)
Return on capital employed (ROCE)
• Net profit before interest and taxation______ x 100
Share capital + Reserves + Non-current liabilities
❑ Return (Net profit before interest and taxation) – Operating profit
❑ Capital Employed (Share capital + Reserves + Non-current liabilities) -
Long term funds invested in the business
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