169 :- Calculate Return on Investment (ROI) from the following details: Net Profit after Tax Rs 6,50,000; Rate of Income Tax 50%; 10% Debentures of Rs 100 each Rs 10,00,000; Fixed Assets at cost Rs 22,50,000; Accumulated Depreciation on Fixed Assets up to date Rs 2,50,000; Current Assets Rs 12,00,000; Current Liabilities Rs 4,00,000.
Solution :-
Capital Employed = Fixed Assets – Accumulated Depreciation + Current Assets – Current Liabilities
= 22,50,000 – 2,50,000 + 12,00,000 – 4,00,000
= Rs 28,00,000
Let Profit before Tax and after Interest be x
Profit after Interest and Tax = Profit before Tax and after Interest – Tax
6,50,000 = x – 50/100x
6,50,000 = 50x/100
x = 6,50,000 x 100/50
x (Profit before Tax and after Interest) = Rs 13,00,000
Profit before Tax and Interest = Profit before Tax and after Interest + Interest
= 13,00,000 + 10/100 x 10,00,000
= 13,00,000 + 1,00,000
= Rs 14,00,000
Return on Investment = Profit before Tax and Interest/Capital Employed x 100
= 14,00,000/28,00,000 x 100
= 50%