CBSE 2025, Compartment, Set 1

Question

Calculate 'Return on Investment' from the following information:
Net profit after interest and tax = ₹6,00,000
10% Debentures = ₹20,00,000
Capital employed = ₹50,00,000
Tax rate = 40%

Edvaya · Accepted Answer

The correct answer is Subjective. **1. Calculation of Profit Before Tax:** Let Profit before tax be $x$. Tax = 40% of $x = 0.40x$. Profit after tax = $x - 0.40x = 0.60x$. $ 0.60x = 6,00,000 \Rightarrow x = ₹10,00,000 $. Profit before tax = ₹10,00,000. **2. Calculation of Profit Before Interest and Tax (PBIT):** Interest on 10% Debentures = 10% of 20,00,000 = ₹2,00,000. Profit before Interest and Tax = Profit before Tax + Interest $ = 10,00,000 + 2,00,000 = ₹12,00,000$. **3. Calculation of Return on Investment (ROI):** ROI = (Profit before Interest and Tax / Capital Employed) $	imes$ 100 $ = (12,00,000 / 50,00,000) 	imes 100 = 24\%$.

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Accountancy > Financial Statements Analysis > Accounting Ratios

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