Railway Accounts Department Examinations

Showing posts with label ROR. Show all posts
Showing posts with label ROR. Show all posts

Wednesday, April 1, 2020

ROCE - Management Accounting for LDCE

ROCE     -     Management Accounting for LDCE

·         Full form is Return On Capital Employed

 

·         It is most important Ratio among all the Financial Ratios

 

·         ROCE = Return /Capital Employed  x 100

 

·         Expressed in Percentage.  Example  Return is 200 rupees against the capital 2000 rupees employed. ROCE is 200/2000 x 100 = 10 %. 

 

·         Return = Net Profit + or - Non Trading adjustments + Interest on Long term debts + Provision for tax - Interest/Dividend from non trade investments

 

·         Capital Employed = Equity share capital + Reserves & Surpluses + Preference share capital + Debentures & other long term loan - Misc Expenditure & loss - Non trade investments.

 

ROCE in Indian Railways

 

·         Para 511 of Indian Railway Finance & Administrate Code mentions Return on Capital.

 

·         Return on Capital = Percentage of Revenue Surplus/Net Receipts to Capital at charge and Investments from Capital Fund.

 

·         Revenue Surplus/Net Receipts = Total Revenue Receipts - Total Revenue Expenditure

 

·         Since element of Dividends is not there (from 2017-18 onwards due to merger of Railway Budget with General Budget), the Net Receipts and the Revenue Surplus are one and same.

 

·         Total Revenue Receipts = Gross Earnings (X, Y & Z) minus  Suspense

 

·         Total Revenue Expenditure = Gross Working Expenses ( OWE + Appropriation to DRF & Pension Fund) minus Suspense.

****