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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Question 147 Chapter 4 of +2-B
Miscellaneous
147. From the following informations, calculate Return on Investment or Return on Capital Employed :
| Rs | |
| Share Capital | 5,00,000 |
| Reserves and Surplus | 2,50,000 |
| Net Fixed Assets | 22,50,000 |
| Non-current Trade Investments | 2,50,000 |
| Current Assets | 11,00,000 |
| 10% Long-term Borrowings | 20,00,000 |
| Current Liabilities | 8,50,000 |
| Long-term Provision | Nil |
I
| Net Profit before tax | = | Rs 6,00,000 |
| Net Profit before interest, tax and dividend | = | Net Profit before tax + Interest on long-term borrowings |
| = | Rs 6,00,000 + Rs 2,00,000 | |
| = | Rs 8,00,000 | |
| Capital Employed | = | Share Capital + Reserves and Surplus + Long-term borrowings |
| = | Rs 5,00,000 + Rs 2,50,000 + Rs 20,00,000 | |
| = | Rs 27,50,000 |
| Return on Investment Ratio | = | Net Profit before interest, tax and dividend | X | 100 |
| Capital Employed |
| Return on Investment Ratio | = | Rs. 8,00,000 | X | 100 |
| Rs 27,50,000 | ||||
| = | 29.09% |
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Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
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