Question
Calculate Rate on Return on Capital
Employed: Refer the following summarized Balance Sheet & P&L of AB Ltd. as on 31 ‐ 3 ‐ 2022. Summarized Profit and Loss Account is as under for the year ending on 31 ‐ 3 ‐ '04: Rs. Sales (25% Cash sales) 80,00,000 Less: Cost of goods sold 56,00,000 Gross Profit 24,00,000 Net profit (Before interest and tax 50%) 9,00,000 Calculate the following ratios:Solution
= EBIT/ Capital employed X 100 = 9,00,000 / 25,80,000 X 100 = 34.88% CE = Eq Sh. Cap. + Pref. Sh. Cap. + Reserves & Surplus + Debenture + Long Term Loan – Fictitious Assets CE = 10,00,000 + 4,00,000 + 7,00,000 + 5,00,000 – 20,000 = 25,80,000
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