A company has capital employed of $200,000. It has a cost of capital of 12% per cent
Question:
A company has capital employed of $200,000.
It has a cost of capital of 12% per cent per year. Its residual income is $36,000.
What is the company’s return on investment?
Step by Step Answer:
Return on Investment ROI is calculated as net income divided ...View the full answer
Related Video
Return on capital employed or ROCE is a profitability ratio that measures how efficiently a company can generate profits from its capital employed by comparing net operating profit to capital employed. In other words, the return on capital employed shows investors how many dollars in profits each dollar of capital employed generates. ROCE is a long-term profitability ratio because it shows how effectively assets are performing while taking into consideration long-term financing
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