CBSE 2025, Set 1

Question

(b) From the following information, calculate 'Return on Investment':
Shareholders Funds: ₹ 16,00,000
10% Debentures: ₹ 8,00,000
Current Liabilities: ₹ 2,00,000
Current Assets: ₹ 5,00,000
Non-Current Assets: ₹ 21,00,000
Net profit after tax was ₹ 3,00,000 and the tax amounted to ₹ 1,00,000.

Edvaya · Accepted Answer

The correct answer is Subjective. **Step 1: Calculate Profit before Interest and Tax (PBIT)** Profit before Interest and Tax = Net profit after tax + Tax + Interest on Debentures Interest on Debentures = 10% of 8,00,000 = 80,000. PBIT = 3,00,000 + 1,00,000 + 80,000 = ₹ 4,80,000. **Step 2: Calculate Capital Employed** Capital employed = Shareholders Funds + Long Term Debt (Debentures) Capital employed = 16,00,000 + 8,00,000 = ₹ 24,00,000. *(Alternate method: Capital employed = Non-Current assets + Current Assets - Current Liabilities = 21,00,000 + 5,00,000 - 2,00,000 = ₹ 24,00,000).* **Step 3: Calculate Return on Investment (ROI)** ROI = (PBIT / Capital Employed) × 100 ROI = (4,80,000 / 24,00,000) × 100 = **20%**.

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Accountancy > Financial Statements Analysis > Accounting Ratios

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