Question 133 Chapter 4 of +2-B - T.S. Grewal 12 Class

Question 133 Chapter 4 of +2-B

Table of Contents

Return on Capital Employed (or Return on Investment) Ratio

133. Following is the Balance Sheet of the Bharati Ltd. as at 31st March, 2019:

Particulars		Note No.	Rs.
I. Equity and Liabilities
1. Shareholders’ Funds
(a) Share Capital			7,50,000
(b) Reserves and Surplus
Surplus, i.e., Balance in Statement of Profit and Loss:
Opening Balance	6,30,000
Add: Transfer from Statement of Profit and Loss	14,58,000		20,88,000
2. Non-Current Liabilities
15% Long-term Borrowings			24,00,000
2. Current Liabilities			12,00,000
Total			64,38,000
II. Assets
1. Non-Current Assets
a. Fixed Assets			27,00,000
b. Non-Current Investments:
i. 10% Investments			3,00,000
ii. 10% Non-trade Investments			1,80,000
2. Current Assets			32,58,000
Total			64,38,000

You are required to calculate Return on Investment for the year 2018-19 with reference to Opening Capital Employed.

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Interest on borrowings	=	Rs. 24,00,000 x 15%
	=	Rs. 3,60,000
Net Profit before Tax	=	Net Profit after tax + Interest on borrowings – Interest received on Non-trade Investments
	=	Rs. 14,58,000 + Rs. 3,60,000 – Rs. 18, 000
	=	Rs. 18,00,000
Capital Employed	=	Shareholder’s Funds Opening + Non-Current Liabilities Opening– Non-Trade Investment
	=	Rs. 7,50,000 + Rs. 6,30,000 + Rs. 24,00,000 – Rs 1,80,000
	=	Rs. 36,00,000

Net Profit Ratio	=	Profit before Interest and Tax	X	100
		Capital Employed

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Balance Sheet: Meaning, Format & Examples

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Also, Check out the solved question of previous Chapters: –

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

Question 133 Chapter 4 of +2-B – T.S. Grewal 12 Class