Advertisement
Question 131 Chapter 4 of +2-B
Advertisement
Table of Contents
Return on Capital Employed (or Return on Investment) Ratio
131. y Ltd.’s profit after interest and tax was Rs. 1,00,000. Its Current Assets
were Rs. 4,00,000; Current Liabilities Rs. 2,00,000; Fixed Assets Rs.
6,00,000 and 10% Long-term Debt Rs. 4,00,000. The rate of tax was 20%.
Calculate ‘Return on Investment’ of Y Ltd.
The solution of Question 131 Chapter 4 of +2-B: –
| Profit before tax | = | 100 |
| Tax | = | 20 |
| Profit after tax | = | 100 – 20 |
| = | 80 | |
| Profit after tax | = | Rs. 1,00,000 |
| Profit before tax | = | 100 | X | Rs.1,00,000 |
| 80 |
| = | Rs. 1,25,000 | |
| Interest on long-term borrowings | = | Rs. 4,00, 000 ×10% |
| = | Rs. 40,000 | |
| Capital Employed | = | Fixed Assets+ Current Assets – Current Liabilities |
| = | Rs. 6,00,000 + Rs. 4,00,000 – Rs. 2,00,000 | |
| = | Rs. 8,00,000 |
Advertisement-X
| Net Profit Ratio | = | Profit before Interest and Tax | X | 100 |
| Capital Employed |
| Net Profit Ratio | = | Rs. 1,65,000 | X | 100 |
| Rs. 8,00,000 | ||||
| = | 20.63% |
Balance Sheet: Meaning, Format & Examples
Thanks, Please Like and share with your friends
Comment if you have any question.
Also, Check out the solved question of previous Chapters: –
Advertisement-X
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
Advertisement-Y