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

Question No. 133- Chapter No.4 - T.S. Grewal +2 Book Part B

Question 133 Chapter 4 of +2-B

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.

The solution of Question 133 Chapter 4 of +2-B: –

 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
 Net Profit Ratio = Rs. 18,00,000 X 100 Rs. 36,00,000 = 50%

Balance Sheet: Meaning, Format & Examples

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