Question

Net Profit after Interest but before Tax ₹ 1,40,000, 15% Long-term Borrowings ₹ 4,00,000, Tax Rate 50, Return on Capital Employed 25%. Calculate the amount of Shareholders’ Funds.

Answer 1

Net Profit before Interest and Tax = `₹ 1,40,000 + (₹ 4,00,000 xx 15/100)`

= ₹ 2,00,000

Return on Capital Employed = `"Net Profit before Interest and Tax"/"Capital Employed" xx 100`

25 = `(₹ 2,00,000)/"Capital Employed" xx 100`

`25/100 = (₹ 2,00,000)/"Capital Employed"`

Capital Employed = ₹ 8,00,000

Capital Employed = Non-current Liabilities + Shareholders’ Funds

₹ 8,00,000 = ₹ 4,00,000 + Shareholders’ Funds

Shareholders’ Funds = ₹ 4,00,000