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Question No 56 Chapter 7 – UNIMAX Class 12 Part 2 – 2021
56. From the following details, calculate ‘return on capital employed’.
Gross profit 2,00,000, Office and Administrative expenses 20,000; Selling and Distribution expenses 50,000; Interest on long-term debts 16,000; Tax 24,000; Non-current Assets 6,00,000. Current Assets 3,00,000 and Current liabilities 2,50,000.
| Return on capital employed | = | Net profit before interest and tax | x | 100 |
| Capital Employed |
| Net profit before interest and tax | = | Gross profit – Office and Administrative Exp. – Selling and distribution Exp. |
| = | 2,00,000 – 20,000 – 50,000 | |
| = | 1,30,000 | |
| Capital employed | = | Non-current assets + Current Assets – Current Liabilities |
| = | 6,00,000+ 3,00,000 – 2,50,000 | |
| = | 6,50,000 |
| Return on capital employed | = | 1,30,000 | x | 100 | = | 20% |
| 6,50,000 |
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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