The financial information about two competing firms Black Limited and White Limited is given as follows: 1.
Question:
The financial information about two competing firms Black Limited and White Limited is given as follows:
1. Based upon the above information, compute the return on capital employed and return on equity for both the firms.
2. Both the firms have same ROCE but they differ on ROE. Why?
Transcribed Image Text:
Particulars Shareholders funds Borrowed funds at 10% Total capital employed EBIT Tax rate (in Million) Black Limited 500 500 1,000 120 30% White Limited 250 750 1,000 120 30%
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1 The ROCE and ROE of the two firms can be calculated ...View the full answer
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