Read the following information and answer the following question.
| PARTICULARS | AMOUNT (₹) |
| Gross profit | ₹1,00,000 |
| Working capital | ₹25,000 |
| Office and administrative expenses | ₹10,000 |
| Selling and distribution expenses | ₹25,000 |
| Interest on long-term debts | ₹8,000 |
| Tax | ₹12,000 |
| Non-current assets | ₹3,00,000 |
| Current assets | ₹1,50,000 |
| Current liabilities | ₹1,25,000 |
Calculate the net profit after tax of the company.
Answer & explanation
Correct answer: option 2
The correct answer is option 2 i.e. ₹45,000
Net profit before interest and tax = Gross profit - office and administrative expenses - selling and distribution expenses
= 1,00,000 - 10,000 -25,000
= ₹65,000
Net profit after interest and tax = Net profit before interest and tax - Tax - Interest on long term debts
= 65,000 - 8,000 -12,000
= ₹45,000