Advertisements
Advertisements
Question
For the year 2022-23, the Return on Investment of Yolo Ltd. was 20%; its Capital Employed being ₹ 50,00,000.
- You are required to give the formula used by Yolo Ltd, to calculate the Return on Investment.
- You have been provided with two components for calculating Return on Investment. Calculate the missing third component.
Solution
Return on Investment = 20%
Capital employed = ₹ 50,00,000
a.
Return on Investment = `("Net Profit before Interest, Tax and Dividends")/("Capital employed")xx100`
b.
Return on Investment = `("Net Profit before Interest, Tax and Dividends")/("Capital employed")xx100`
20 = `("Net Profit before Interest, Tax and Dividends")/("50,00,000")xx100`
`20/100xx50,00,000` = Net profit before Interest, Tax and Dividends
= ₹ 10,00,000
APPEARS IN
RELATED QUESTIONS
From the following information related to Naveen Ltd. calculate
(1) Return on Investment and
(2) Total Assets to Debt Ratio.
Information : Fixed Assets Rs 75,00,000; Current Assets Rs 40,00,000; Current Liabilities Rs 27,00,000; 12% Debentures Rs 80,00,000 and Net Profit before Interest, Tax and Dividend Rs 14,50,000.
Normally, what should be the maturity period for a short term investment from the date of its acquisition to be qualified as cash equivalents?
The fixed assets of a company were ₹ 35,00,000. Its current assets were ₹ 4,30,000 and current liabilities were ₹ 3,30,000. During the year ended 31-03-2019, the company earned net profit before tax ₹ 18,00,000. The tax rate was 30%. Calculate return on investment.
