32 Rotech Group

a,
CACULATION
Ratio
capital tax/ capital W Co Design W Co Gearbox C Co
employed employed
employed (%) 25.59% 11.99% 8.45%
Asset turnover (times)
Operating interest and tax 0.61 0.79 0.19
prifit margin / sales (%() 41.96% 15.18% 45.05%

DISCUSSION
i,would
Return on capital
make the lowemployed:
ROCE. While employees in Design division generate profit by designing products rather than
using machinery so the capital employed would be lower.

ii, Asset turnover:

company. The Gearbox division is the highest at 0.79 times while C Co has the lowest at 0.19 times because the di
asset base to produce the relevant components.

b, Transfer prices:
Satisfy 60%
External sales $8,010,000
gning products rather than

at 0.19 times because the different in the