Calculate return on investment net profit after interest and tax 100000 current assets 400000 current liability 200000 tax rate 20% fixed asset 600000 10% long term debt 400000
Answers
Explanation:
Total Assets = Current Assets + Fixed Assets =400000+ 600000.=1000000.
Capital Employed= Total Assets- Current liability =1000000-200000=800000.
Return on Investment = Net Profit after Interest and tax/ Cap Employed×100 100000/800000 ×100 =12.5%.
Return On investment = 20.625%
Explanation:
Given:
Net Profit After Interest and Tax = 1,00,000
Current Assets = 4,00,000
Current liability = 2,00,000
Tax rate = 20%
Fixed Assets = 6,00,000
10% Long term Debt = 4,00,000
Calculation:
Earning Before Interest And Tax = (Net Profit After Interest and Tax*100/(100-rate) + Interest)
Earning Before Interest And Tax = (1,00,000*100/80 + 4,00,000*10%)
Earning Before Interest And Tax = (1,25,000 + 40,000)
Earning Before Interest And Tax = 1,65,000
Capital Employed = (Total Assets - Current Liabilities )
= ( 6,00,000+ 4,00,000 - 2,00,000 )
Capital Employed = ( 8,00,000 )
Return On investment = (Earning Before Interest And Tax/Capital Employed)
Return On investment = (1,65,000 / 8,00,000) *100
Return On investment = 20.625%
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