Net Profit before Interest and Tax Rs. 6,00,000; Net Fixed Assets Rs. 20,00,000; Net Working Capital Rs. 10,00,000; Current Assets Rs. 11,00,000. Calculate Return on Investment.

SOLUTION

Net Profit before Interest and Tax = 6,00,000
Capital Employed = Net Fixed Assets + Net Working Capital
= 20,00,000 + 10,00,000
= 30,00,000

Return on Investment = Net profit Before Interest and Tax ×100 / Capital Employed
= 6,00,000 × 100 / 30,00,000
= 20%