The financial information about two competing firms Black Limited and White Limited is given as follows: 1.

Question:

The financial information about two competing firms Black Limited and White Limited is given as follows:

Particulars Shareholders funds Borrowed funds at 10% Total capital employed EBIT Tax rate (in Million) Black

1. Based upon the above information, compute the return on capital employed and return on equity for both the firms.

2. Both the firms have same ROCE but they differ on ROE. Why?

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Financial Accounting For Managers

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3rd Edition

Authors: Sanjay Dhamija

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Question Posted: Dec 08, 2023 01:14 AM

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The financial information about two competing firms Black Limited and White Limited is given as follows: 1.

Question:

Particulars Shareholders funds Borrowed funds at 10% Total capital employed EBIT Tax rate (in Million) Black Limited 500 500 1,000 120 30% White Limited 250 750 1,000 120 30%

Step by Step Answer:

1 The ROCE and ROE of the two firms can be calculated ...View the full answer

Financial Accounting For Managers

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