Practicing Success
Practicing Success
CUET Preparation Today
| A grocery owner has an equity stake of Rs 40,000/- in the business. He has borrowed Rs 60,000/-. Profit before interest on loan is Rs 20,000. Loan on interest comes to Rs 6,000/- @ of 10% per annum. The net profit of the firm is Rs 14,000. Calculate the return on Equity. |
20% 15% 35% 40% |
| 35% |
| ROE=Net Income*100/Equity of Investor ROE is (14,000 / 40,000) x 100 = 35 percent. This means that for every Rupee of own money the owner put into the business, he made 35 paisa. |
