The table shows year end information for a company.income statement $ statement of financial position $profit from operations 14 000 5% debenture 2020 30 000finance costs (1 500) ordinary share capital 70 000loss on disposal ofnon-current asset (2 500) share premium account 15 000profit for the year 10 000 retained earnings 35 000What is the return on capital employed (ROCE)?A 6.7% B 8.3% C 9.3% D 11.7%

A company has total assets of Rs. 2,500,000 and current liabilities of Rs. 500,000. The company’s net operating profit is Rs. 300,000. What is the ROCE if the capital employed is calculated as total assets minus current liabilities?15%12%10%18%

Return on Capital EmployedThe table given below shows P&G’s return on capital employed (RoCE) for Year 0 and Year 1.CompanyRoCE (Year 0)RoCE (Year 1)P&G India27.9%70%Which of the following could be the reason for the increase in P&G's RoCE from the previous year (Year 0) to the current year (Year 1)?Expansion in variable marginsIncrease in the employee benefit expenses of the companyAbility to get long-term loans at lower interest rates✕ IncorrectFeedback:Lower interest rates on loans would reduce the interest expense of the company. This would neither affect the EBIT nor the capital employed. Hence, the RoCE would not be affected by the change in interest rates.

Which financial statement is used to calculate the return on investment for shareholders?Question 18Answera.Balance sheetb.Income statementc.Statement of retained earningsd.Statement of cash flows

Argent Corporation had earnings per share of $4 last year, and it paid a $2 divi-dend. Total retained earnings increased by $12 million during the year, and bookvalue per share at year-end was $40. Argent has no preferred stock, and no newcommon stock was issued during the year. If Argent’s year-end debt (whichequals its total liabilities) was $120 million, what was the company’s year-enddebt/assets ratio?Chapter 3: Analysis of Financial Statements 111

Last year Cole Furnaces had $5 million in operating income (EBIT). The companyhad a net depreciation expense of $1 million and an interest expense of $1 million; itscorporate tax rate was 40%. The company has $14 million in operating current assetsand $4 million in operating current liabilities; it has $15 million in net plant andequipment. It estimates that it has an after-tax cost of capital of 10%. Assume thatCole’s only noncash item was depreciation.a. What was the company’s net income for the year?b. What was the company’s net cash flow?c. What was the company’s net operating profit after taxes (NOPAT)?d. Calculate net operating working capital and total net operating capital for thecurrent year.e. If total net operating capital in the previous year was $24 million, what was thecompany’s free cash flow (FCF) for the year?f. What was the company’s Economic Value Added (EVA)?