Statements

Question 1

ROCE

Return on capital employed

Answer 1

To calculate ROCE the profit is expressed as a percentage of the capital employed in the business

Question 2

Value added

Answer 2

The way of showing how inputs to the organisation have changed into valuable outputs (sales)

It shows the increase in monetary value which has resulted from work done and the use of its assets

Question 3

Assets turnover

Answer 3

Number of times the value of the assets has been obtained in turnover (sales)

Question 4

Current ratio

Answer 4

Number of times that the current liabilities are covered by the current assets.

Normally 2:1

Question 5

Gearing ratio

Answer 5

How much of the total funding comes from sources that demand regular payments of interest or dividends.

A high gearing ratio will mean that a low proportion of capital employed is invested by the ordinary shareholders

Question 6

Debt to equity ratio

Answer 6

Will result n a higher percentage than gearing when based on the same data.