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Question
Select the appropriate answer from the alternatives given below & rewrite the completed statement
The relationship between net profit before Tax, interest and dividend and capital employed is known from _____________.
Options
Current Ratio
Quick Ratio
ROI
ROCE
MCQ
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Solution
The relationship between net profit before Tax, interest and dividend and capital employed is known from ROI.
Explanation: Return on investment, i.e. ROI, is based on capital employed, i.e. net profit before tax, interest and dividend divided by capital employed, where capital employed reflects the total amount invested in the business.
While quick ratio and current ratio reflect the liquidity of the business, ROI reflects the profitability.
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