Question

Rs. 3,00,000
a) From the following, Calculate ROI:
Equity share capital
Reserve & Surplus
Rs. 1,54,000
Profit after interest and tax
Rs. 1,20,000
9% Debentures
Rs. 2,00,000
Tax Rate 40%.​

Answer 1

Answer:

Return on capital employed =

profit before interest and tax/ capital employed

capital employed = shareholders fund + debenture

= 300000+154000+200000

=654000

Profit after interest and before tax = 120000/60×100= 200000

(+) interest on debenture = 18000

profit before interest and tax = 218000

ROI = 218000/654000×100= 33.33%