Here, capital employed refers to equity share capital, preference share capital, reserves and surplus, debenture capital and long term loans. Thus, it is the total amount employed/invested in the business.
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Question
Explain the Return On Investment (ROI)
Answer in Brief
Solution
ROI : This ratio measures the relationship between profit before interest, tax and dividend and capital invested or Capital employed. It is expressed in percentage. The following formula is used to find the ROI.
∴ ROI = `"Profit Before interest , tax and dividend"/"Capital Employed" xx 100`
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Return on Investment (ROI)
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RELATED QUESTIONS
State whether following statement is true or false :
ROI is calculated on ownership capital only.
Select the appropriate answer from the alternatives given below & rewrite the completed statement
The relationship between net profit before Tax, interest and dividend and capital employed is known from _____________.
Explain the following :
ROI.
Solve the following:
If total capital invested by company is Rs 5,00,000 and net profit before interest, tax and dividend is Rs 1,60,000, what is ROI?
Explain return on investment (ROI).
