Profitability

Measures of return on investment

(3) Return on Capital Employed

A measure of profit before interest charges compared to long-term finance employed (shareholders' funds plus long term creditors or total assets less current liabilities). The ability of the company to generate profit from its permanent financial base to pay both interest and dividends to the suppliers of its finance.

Profit on ordinary activities before ________interest (and tax)_____	=	99.6	=	26%
Total assets less current liabilities		382.1

 

Return on Equity

A comprehensive measure of overall profit (covering operating, investments and financing) related to the shareholders' investment in the company. It can be compared with the risk/return balance of other forms of investment.

Profit on ordinary activities __before tax (after interest)__	=	104.6	=	39%
Ordinary Shareholders' funds		266.7