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Question
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?
Solution
Net Profit before Interest, Tax and Dividend = Rs. 160,000 (Given)
Total Capital Invested (Net Capital Employed) = Rs. 50,000(Given)
Return on Investment (ROI) =
`"Net Profit before Interest, Tax and Dividend"/"Total Capital Invested (Net Capital Employed)"` x 100
= `[160,000]/[500,000] xx 100`
= 32 %
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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.
Explain return on investment (ROI).
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