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    Question

    Calculate Rate of Return on Equity shareholders

    fund: 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:
    A 22% Correct Answer Incorrect Answer
    B 23% Correct Answer Incorrect Answer
    C 25% Correct Answer Incorrect Answer
    D 20% Correct Answer Incorrect Answer
    E 18% Correct Answer Incorrect Answer

    Solution

    Rate of return on Equity Shareholders Fund = PAT – Pref. Div. / ESHF X 100 = 3,72,500 / 16,80,000 X 100 = 22.17 % ESHF = Eq. Sh. Cap. + Reserves & Surplus – Fictitious Assets ESHF = 10,00,000 + 7,00,000 – 20,000 = 16,80,000  

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