Question

XYZ Ltd. has the following details: Equity Share Capital = ₹50 lakhs, Reserves = ₹20 lakhs, Long-term Debt = ₹30 lakhs. EBIT for the year is ₹18 lakhs, and interest expense is ₹4 lakhs. Calculate the Return on Capital Employed (ROC

  • E and suggest if the capital is efficiently used.
A 20% – Efficient
B 18% – Efficient
C 15% – Inefficient
D 12% – Inefficient
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