Question 132 Chapter 4 of +2-B - T.S. Grewal 12 Class

Question 132 Chapter 4 of +2-B

Return on Capital Employed (or Return on Investment) Ratio

132. From the following Balance Sheet of Global Ltd., you are required to calculate Return on Investment for the year 2018-19:

BALANCE SHEET OF GLOBAL LTD. as at 31st March, 2019

Particulars	Note No.	Rs.
I. Equity and Liabilities
1. Shareholders’ Funds
(a) Share Capital		5,00,000
(b) Reserves and Surplus		4,20,0000
2. Non-Current Liabilities
15% Long-term Borrowings		16,00,000
2. Current Liabilities		8,00,000
Total		33,20,000
II. Assets
1. Non-Current Assets
a. Fixed Assets (Tangible Assets)		16,00,000
b. Non-Current Investments:
i. 10% Investments		2,00,000
ii. 10% Non-trade Investments		1,20,000
2. Current Assets		14,00,000
Total		33,20,000

Additional Information: Net Profit before Tax for the year 2018-19 is Rs 9,72,000.

 

The solution of Question 132 Chapter 4 of +2-B: -

 

Interest on borrowings	=	Rs. 2,40,000
Net Profit before Tax	=	Rs. 9,72,000
Net Profit before Interest and Tax	=	Rs. 9,72,000 + Rs. 2,40,000
	=	Rs. 12,12,000

Net Profit before Interest and Tax excluding interest on Non −trade investments

	=	Rs. 12,12,000 – Rs. 12,000
	=	Rs. 12,00,000
Capital Employed	=	Shareholder’s Funds + Non-Current Liabilities – Non-Trade Investment
	=	Rs. 5,00,000 + Rs. 4,20,000 + Rs. 16,00,000 – Rs 1,20,000
	=	Rs. 24,00,000

 

Net Profit Ratio	=	Profit before Interest and Tax	X	100
		Capital Employed

Net Profit Ratio	=	Rs. 12,00,000	X	100
		Rs. 24,00,000
	=	50%

 

 

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Also, Check out the solved question of previous Chapters: -

T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

• Chapter No. 1 - Financial Statement of Not-For-Profit Organisations
• Chapter No. 2 - Accounting for Partnership Firms - Fundamentals
• Chapter No. 3 - Goodwill: Nature and Valuation
• Chapter No. 4 - Change in Profit-Sharing Ratio Among the Existing Partners
• Chapter No. 5 - Admission of a Partner
• Chapter No. 6 - Retirement/Death of a Partner
• Chapter No. 7 - Dissolution of a Partnership Firm

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

• Chapter No. 8 - Company Accounts -  Accounting for Share Capital
• Chapter No. 9 - Company Accounts - Issue of Debentures
• Chapter No. 10 - Redemption of Debentures

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

• Chapter No. 1 - Financial Statements of a Company
• Chapter No. 2 - Financial Statement Analysis 
• Chapter No. 3 - Tools of Financial Statement Analysis - Comparative Statements and Common- Size Statements
• Chapter No. 4 - Accounting Ratios
• Chapter No. 5 - Cash Flow Statement

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication