Read the following information carefully and answer the question.
The Balance Sheet of ABC Ltd as on 31 March 2022:
| Liabilities | Amount (₹) |
Asset | Amount (₹) |
| Share Capital Equity (₹10) | 4,00,000 | Fixed Assets | 9,50,000 |
| 12% preference shares | 1,00,000 | Current Assets | 2,34,000 |
| General Reserve | 1,84,000 | ||
| 10% Debentures | 4,00,000 | ||
| Current Liabilities | 1,00,000 | ||
| 11,84,000 | 11,84,000 |
Additional information :
1. Market price of share = 34
2. Net profit after tax = 1,50,000
3. Tax = 50,000
The return on investment will be :
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → 22.14%
Return on Investment = Profit before interest and tax ÷ Capital employed × 100
Debenture interest = 10% of ₹4,00,000 = ₹40,000
Profit before interest and tax = ₹1,50,000 + ₹40,000 + ₹50,000 = ₹2,40,000
Capital employed = ₹4,00,000 + ₹1,00,000 + ₹1,84,000 + ₹4,00,000 = ₹10,84,000
ROI = ₹2,40,000 ÷ ₹10,84,000 × 100 = 22.14%
NCERT (2026-27 edition):
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