On the basis of the following information, answer the question.
| Particulars | Amount (₹) |
| Share Capital: | |
| Equity share capital (₹10 each) | 12,00,000 |
| 12% Preference share capital | 3,00,000 |
| Reserves & Surplus | 5,00,000 |
| 10% Debentures | 12,00,000 |
| Current Liabilities | 3,00,000 |
| Fixed Assets | 28,00,000 |
| Current Assets | 7,00,000 |
| Net profit after tax as per Statement of Profit & Loss | 4,50,000 |
| Tax | 1,50,000 |
| Market Price of the Share | 34 |
Return on Investment will be:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → 22.5%
Return on Investment = Profit before Interest and Tax ÷ Capital Employed × 100
Interest on debentures = ₹12,00,000 × 10/100 = ₹1,20,000
Profit before interest and tax = ₹4,50,000 + ₹1,50,000 + ₹1,20,000 = ₹7,20,000
Capital employed = Equity share capital + Preference share capital + Reserves & Surplus + Debentures
= ₹12,00,000 + ₹3,00,000 + ₹5,00,000 + ₹12,00,000 = ₹32,00,000
(Check: Fixed assets + Current assets − Current liabilities = ₹28,00,000 + ₹7,00,000 − ₹3,00,000 = ₹32,00,000)
Return on Investment = ₹7,20,000 ÷ ₹32,00,000 × 100 = 22.5%
NCERT (2026-27 edition):
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