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      Question

      Given the Balance Sheet: Equity ₹200 lakh; Long-term

      Debt ₹100 lakh; Revenue ₹500 lakh; EBIT ₹120 lakh; Interest ₹20 lakh; Tax rate 30%. Calculate ROCE and ROE.
      A ROCE = 30%, ROE = 35% Correct Answer Incorrect Answer
      B ROCE = 40%, ROE = 35% Correct Answer Incorrect Answer
      C ROCE = 30%, ROE = 28% Correct Answer Incorrect Answer
      D ROCE = 25%, ROE = 30% Correct Answer Incorrect Answer
      E ROCE = 36%, ROE = 32% Correct Answer Incorrect Answer

      Solution

      ROCE = EBIT / (Equity+Debt) = 120/300 = 40%; PAT = (120–20)×(1–0.3)=70; ROE = 70/200 = 35%

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