#### Question

From the following information related to Naveen Ltd. calculate

(1) Return on Investment and

(2) Total Assets to Debt Ratio.

Information : Fixed Assets Rs 75,00,000; Current Assets Rs 40,00,000; Current Liabilities Rs 27,00,000; 12% Debentures Rs 80,00,000 and Net Profit before Interest, Tax and Dividend Rs 14,50,000.

#### Solution

1) **Return on Investment**

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

Net Profit before Interest, Tax and Dividend = 14,50,000

Capital Employed = Fixed Assets + Current Assets – Current Liabilities

= (75,00,000 + 4,00,000 – 27,00,000)

= 88,00,000

Return on Investment = `1450000/8800000 xx 100`

= 16.48%

2) **Total Assets to Debt to Ratio**

Total Assets to Debt Ratio = `"Total Assets"/"Debt"`

Total Assets = Fixed Assets + Current Asset

= (75, 00,000 + 40, 00,000)

= 1, 15, 00,000

Debt = 80, 00,000

Total Assets to Debt Ratio = `11500000/8000000 = 1.4375`