A-LevelAccountingAnalysis and communication of accounting information9706/12 · Oct/Nov 2024 · Q211 Mark
A company's return on capital employed decreased to 10% in the current year from 15% in the previous year. The directors have noted the following changes during the current year. 1 A substantial investment in non-current assets was funded by new debentures. 2 There was an increase in current liabilities. 3 The expenses to revenue ratio increased. 4 The rate of interest on the company's large overdraft increased. Which changes could explain the decrease in the return on capital employed?
A1 and 2
B1 and 3
C2 and 4
D3 and 4
✓ Correct answer
B: 1 and 3
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