sxeci
Dec 19, 2010, 06:20 AM
the profit before interest extracted from a companys profit and loss account is $128000,interest expenses was $8000. Below is the balance sheet
fixed assets.. $485000
net current assets.. $27000
longterm liabilities-debentures... $80000
how much is return on capital employed?
the equation for this is profit before interest and tax/total assets-current liabilities
I am a bit confused with the part that says interest expense wa $8000... I don't know if I should add it to the profit before tax and then find the answer... that one that is puzzlying me because there is a profit before tax figure and also a interest expanse stated as was $8000... do I have to use the interset expense figure to calcultae this?. I did without the interest and I got 25% but I'm still thinking about the interest expense... okay I think I'm correct I not suppose to use the interest because it was added after the profit.. okay the answer is 25%
fixed assets.. $485000
net current assets.. $27000
longterm liabilities-debentures... $80000
how much is return on capital employed?
the equation for this is profit before interest and tax/total assets-current liabilities
I am a bit confused with the part that says interest expense wa $8000... I don't know if I should add it to the profit before tax and then find the answer... that one that is puzzlying me because there is a profit before tax figure and also a interest expanse stated as was $8000... do I have to use the interset expense figure to calcultae this?. I did without the interest and I got 25% but I'm still thinking about the interest expense... okay I think I'm correct I not suppose to use the interest because it was added after the profit.. okay the answer is 25%