The total share capital of ABC Private Limited is Rs 50 lacs. The amount of debt is Rs 20 lacs. The company has earned a profit of Rs 20 lacs during the current financial year. Its return on investment (ROI) for the present year is:
Answer & explanation
Correct answer: option 4
The correct answer is option 4- 28.57%.
Total investment = Share Capital + Debt
= 50,00,000 + 20,00,000
Profit = 20,00,000
ROI = EBIT/Total Investment × 100
= 20,00,000/70,00,000 x 100
= 28.57%
* As no other information is provided so it is assumed that profit given is before interest and tax.