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Question : A company has earned Rs 5,00,000 as profit before interest and tax. Its ROI is 20%. Calculate return on investment.

Option 1: Shareholder fund

Option 2: Market price of share

Option 3: Capital employed

Option 4: None of the above


Team Careers360 12th Jan, 2024
Answer (1)
Team Careers360 24th Jan, 2024

Correct Answer: Capital employed


Solution : Answer = Capital employed

Return on capital employed=$\frac{\text{N.P before interest on taxes}}{\text{Capital employed}} \times 100$

⇒ Capital employed= $\frac{5,00,000}{20} \times 100$= Rs 25,00,000.
Hence, the correct option is 3.

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