Question : Which of the following statements are incorrect with respect to Return on capital employed?
Option 1: Return on Capital Employed or Return on Investment assesses overall performance (profitability) of the enterprise.
Option 2: It measures how efficiently the resources of the business are used.
Option 3: Return on Capital Employed is not a fair measure of the profitability of any concern
Option 4: it should be compared with its own ratios of the past years
Correct Answer: Return on Capital Employed is not a fair measure of the profitability of any concern
Solution :
Answer =
Return on Capital Employed (ROCE) is not a fair measure of the profitability of any concern.
Return on capital Employed is not a fair measure of the profitability of any concern. ROCE is a
crucial
measure of profitability, assessing overall performance and efficiency by comparing returns with the capital employed, and should be compared with past ratios for trend analysis.
Hence, the correct option is 3.
