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Question 127 Chapter 4 of +2-B
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Table of Contents
Return on Capital Employed (or Return on Investment) Ratio
127. Calculate Return on Investment (ROI) from the following details: Net
Profit after Tax Rs 6,50,000; Rate of Income Tax 50%; 10% Debentures
of 100 each Rs 10,00,000; Fixed Assets at cost Rs 22,50,000;
Accumulated Depreciation on Fixed Assets up to date Rs 2,50,000;
Current Assets Rs. 12,00,000; Current Liabilities Rs 4,00,000.
The solution of Question 127 Chapter 4 of +2-B: –
| Net Fixed Assets | = | Fixed Assets at cost − Accumulated Depreciation |
| = | Rs. 22,50,000 – Rs. 2,50,000 | |
| = | Rs. 20,00,000 | |
| Capital Employed | = | Net Fixed Assets + Current Assets − Current Liabilities |
| = | 20,00,000 + Rs. 12,00,000 – Rs. 4,00,000 | |
| = | Rs. 28,00,000 | |
| Interest of Debentures | = | Rs. 10,00,000 x 10% |
| = | Rs. 1,00,000 | |
| Profit before Tax | = | x |
| Profit after Tax | = | Profit before Tax − Tax |
| Tax Rate | = | 50% |
| Tax | = | .5x |
| x − 0.5 x | = | Rs. 6,50,000 |
| 0.5 x | = | Rs. 6,50,000 |
| x | = | Rs. 6,50,000 |
| 0.5 | ||
| Net Profit before Tax | = | Rs. 13,00,000 |
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| Profit before Interest and Tax | = | Profit before Tax + Interest on Long-term Debt |
| = | Rs. 14,00,000 |
| Net Profit Ratio | = | Profit before Interest and Tax | X | 100 |
| Capital Employed |
| Net Profit Ratio | = | Rs. 14,00,000 | X | 100 |
| Rs. 28,00,000 | ||||
| = | 50% |
Balance Sheet: Meaning, Format & Examples
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Also, Check out the solved question of previous Chapters: –
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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
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