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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Calculate Return on Investment (ROI) from the following details: Net Profit after Tax ₹6,50,000; Rate of Income Tax 50%; 10% Debentures of ₹100 each ₹10,00,000; Fixed Assets at cost ₹22,50,000; Accumulated Depreciation on Fixed Assets up to date ₹2,50,000; Current Assets ₹12,00,000; Current Liabilities ₹4,00,000.
Net Fixed Assets = Fixed Assets (at cost) − Accumulated Depreciation = 22,50,000 − 2,50,000 = ₹20,00,000
Capital Employed = Net Fixed Assets + Current Assets − Current Liabilities = 20,00,000 + 12,00,000 − 4,00,000 = ₹28,00,000
Interest on 10% Debentures = 10% of 10,00,000 = ₹1,00,000
Let Profit before Tax = x. Since Tax Rate = 50%,
x − 0.5x = 6,50,000
x = ₹13,00,000 (Profit before Tax)
Profit before Interest and Tax = Profit before Tax + Interest on Long-term Debt = 13,00,000 + 1,00,000 = ₹14,00,000
Return on Investment = Profit before Interest and Tax ÷ Capital Employed × 100 = 14,00,000 ÷ 28,00,000 × 100 = 50%
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.
This guide covers "T.S. Grewal Class 12 Vol 3 Chapter 4 Q.169 - Accounting Ratios", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 4 - Accounting Ratios.
It is primarily curated for Class 11 and Class 12 high school commerce, accounting, and economics students, as well as aspirants preparing for board exams or CA Foundation.
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