In this part of the assignment I will be interpreting the table below comparing the industry profit. | Mainwaring Engineering year ending march 2011 | Mainwaring Engineering year ending march 2012 | Industry averages of year march 2012 | Return on capital employed | 7.8% | 8% | 8% | Gross profit percentage | 48% | 44% | 40% | Net profit percentage | 76% | 4% | 75% | Stock turnover | 92 days | 4 days | 90 days | Debtor collection period | 58 days | 60 days | 55 days | Current ratio | 2.6:1 | 2.4:1 | 2.5:1 | Acid test | 1.5:1 | 1.3:1 | 1.4:1 |

Return on capital employed (ROCE)
To be able to work out the return on capital employed I had to calculate the net profit before tax / Capital profit * 100 and it will give you, your answer.
Net profit before interest and taxCaptial employed ×100
Mainwaring engineering year ending March 2012 the Return on capital employed was 8%
69850×100
Mainwaring Engineering is going to be interested to see how well a company uses its capital employed as well as seeing the company’s long-term financing plans. Mainwaring Engineering returns should always be high than the rate at which they are borrowing to fund the assets. If Mainwaring Engineering borrow at 10% and can only aim to return 5%, they are going to be losing money.
The return on capital employed in the ending of March 2011 was 7.8% and the Industry averages of year march 2012 was 8% and the company achieved 8% in the ending of March 2012 which means they have made an improvement from the year before and achieved their target for 2012.
As the company achieved 8% this is a huge benefit as they are paying back what they have borrowed and this will allow the company to be able to gain other investors trust. This can also help a company that deliver’s above-average returns over a period of several years and ROCE can help the company spot them.

Gross