1. Posts in the subject areas are now being moderated. Please do not post any details about your exam for at least 3 working days. You may not see your post appear for a day or two. See the 'Forum help' thread entitled 'Using forums during exam period' for further information. Wishing you the best of luck with your exams.
    Dismiss Notice

Roce

Discussion in 'CT2' started by HARDIK, May 14, 2013.

  1. HARDIK

    HARDIK Member

    IN calculating the ROCE do we include the retained earnings also in the denominator,.,....??????
    because the definition says share capital+reserves +long term debt.
    and normally reserves includes share premium account and the Revaluation reserve.
    So what about the retained earnings...?????????
     
    HARDIK, May 14, 2013
    #1
  2. Amit_Bansal

    Amit_Bansal Member

    Yeah we include retained earning also.
    Points to Remember:
    1. Reserves = Retained Earnings + Other Reserves
    2. Other Reserves = Share premium + Revaluation Reserve
     
    Amit_Bansal, May 14, 2013
    #2
  3. Colin McKee

    Colin McKee ActEd Tutor Staff Member

    retained

    Hi, yes retained earnings is one of the most important (and usually biggest) part of shareholders reserves. Must be added to bottom line in almost anything that needs "equity capital" on the bottom line. (eg gearing, ROCE, asset utilisation, ..)
     
    Colin McKee, May 14, 2013
    #3
    Jinnentonix likes this.
  4. HARDIK

    HARDIK Member

    thnkxx.....
     
    HARDIK, May 15, 2013
    #4
  5. sahildh

    sahildh Member

    shall we also deduct intangibles from the denominator from the share capital as done in previous ratios?
     
    sahildh, Apr 5, 2016
    #5
  6. Colin McKee

    Colin McKee ActEd Tutor Staff Member

    I dont think so. I would stick to the core reading formula.
     
    Colin McKee, Apr 5, 2016
    #6
  7. indexo

    indexo Member

    For the denominator, should we take free reserves at the start of the year or end of the year?
     
    indexo, Apr 16, 2020
    #7
  8. Lynn Birchall

    Lynn Birchall ActEd Tutor Staff Member

    I'd tend to go 'end of the year'. Sometimes in the exam that's the only option, for example if the question gives a P&L for year X and the associated Statement of Financial Position as at end of year X!
     
    Lynn Birchall, Apr 16, 2020
    #8

Share This Page