Question 132 Chapter 4 of +2-B
Table of Contents
Return on Capital Employed (or Return on Investment) Ratio
132. From the following Balance Sheet of Global Ltd., you are required to calculate Return on Investment for the year 2018-19:
| BALANCE SHEET OF GLOBAL LTD. as at 31st March, 2019 | ||
| Particulars | Note No. | Rs. |
| I. Equity and Liabilities | ||
| 1. Shareholders’ Funds | ||
| (a) Share Capital | 5,00,000 | |
| (b) Reserves and Surplus | 4,20,0000 | |
| 2. Non-Current Liabilities | ||
| 15% Long-term Borrowings | 16,00,000 | |
| 2. Current Liabilities | 8,00,000 | |
| Total | 33,20,000 | |
| II. Assets | ||
| 1. Non-Current Assets | ||
| a. Fixed Assets (Tangible Assets) | 16,00,000 | |
| b. Non-Current Investments: | ||
| i. 10% Investments | 2,00,000 | |
| ii. 10% Non-trade Investments | 1,20,000 | |
| 2. Current Assets | 14,00,000 | |
| Total | 33,20,000 | |
Additional Information: Net Profit before Tax for the year 2018-19 is Rs 9,72,000.
The solution of Question 132 Chapter 4 of +2-B: –
| Interest on borrowings | = | Rs. 2,40,000 |
| Net Profit before Tax | = | Rs. 9,72,000 |
| Net Profit before Interest and Tax | = | Rs. 9,72,000 + Rs. 2,40,000 |
| = | Rs. 12,12,000 |
Net Profit before Interest and Tax excluding interest on Non −trade investments
| = | Rs. 12,12,000 – Rs. 12,000 | |
| = | Rs. 12,00,000 | |
| Capital Employed | = | Shareholder’s Funds + Non-Current Liabilities – Non-Trade Investment |
| = | Rs. 5,00,000 + Rs. 4,20,000 + Rs. 16,00,000 – Rs 1,20,000 | |
| = | Rs. 24,00,000 |
| Net Profit Ratio | = | Profit before Interest and Tax | X | 100 |
| Capital Employed |
| Net Profit Ratio | = | Rs. 12,00,000 | X | 100 |
| Rs. 24,00,000 | ||||
| = | 50% |
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Balance Sheet: Meaning, Format & Examples
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Also, Check out the solved question of previous Chapters: –
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
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