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Question
Net Profit before Interest and Tax ₹4,00,000; 15% Long-term Debt ₹8,00,000; Shareholders' Funds ₹4,00,000. Calculate Return on Investment.
Solution
Net Profit before Interest and Tax = 4,00,000
Capital Employed = 15% long-term Debt + Shareholders’ Funds
= 8,00,000 + 4,00,000 = 12,00,000
Return on Investment =`"Net Profit before Interest and Tax"/"Capital Employed" xx 100`
`= 400000/1200000 xx 100 = 33.33%`
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