UK ROCE Calculation

[Manoz]

Greeting everyone

I understand that ROCE = EBIT / Capital Employed where Captial Employed = Total Asset - Current Liabilities.

From http://www.londonstockexchange.com/...mentals.html?fourWayKey=GB0008847096GBGBXSET0 website, I look at Tesco:

For 2014

EBIT = 2259
Total Asset = 50164
Current Liabilities = 21399.00
ROCE = 7.8%

My calculated ROCE does not match to London Exchange's Tesco ROCE 2014 = 10.36% under Ratios - based on IFRS.

Could anyone please kindly tell me why?

 

[Fidget]

The EBIT figure you're using isn't correct because that's the figure after interest.

It's also common for the capital employed figure to be adjusted to take out capital that isn't actually employed - money just sitting in the bank, for instance, but without knowing what it's been adjusted for, it's hard to tell.

 

[Manoz]

The EBIT figure you're using isn't correct because that's the figure after interest.

It's also common for the capital employed figure to be adjusted to take out capital that isn't actually employed - money just sitting in the bank, for instance, but without knowing what it's been adjusted for, it's hard to tell.

Does it means I extract 2631 from operating profit before being deducted with interest?

 

[Manoz]

Does it means I extract 2631 from operating profit before being deducted with interest?

Operating Profit = £2631M
Total Asset = £50164M
Current Liabilities = £21399M
ROCE = 9.145%

My calculated ROCE still does not match to London Exchange's Tesco ROCE 2014 = 10.36% under Ratios - based on IFRS.

 

[Manoz]

I would be very grateful if anyone is kind enough to show me how to implement it correctly.

 

[Fidget]

I would be very grateful if anyone is kind enough to show me how to implement it correctly.

Perhaps the best thing to do is to drop an email to the London stock exchange and ask how it's been calculated from the figures given.