Question 132 Chapter 4 of +2-B – T.S. Grewal 12 Class

Question No. 132- Chapter No.4 - T.S. Grewal +2 Book Part B

Question 132 Chapter 4 of +2-B

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%

Balance Sheet: Meaning, Format & Examples

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