On the basis of the following information, answer the question :
|
Particulars |
Amount (Rs.) |
|
Share Capital : |
|
|
Equity share capital (Rs. 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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