Question

From the following information related to Naveen Ltd., calculate (a) Return on Investment and (b) Total Assets to Debt Ratio:
Information: Fixed Assets ₹ 75,00,000; Current Assets ₹ 40,00,000; Current Liabilities ₹ 27,00,000; 12% Debentures ₹ 80,00,000 and Net Profit before Interest, Tax and Dividend ₹ 14,50,000.

Answer 1

1) Return on Investment





2) Total Assets to Debt to Ratio

$$\begin{gathered} \mathrm{Total}\mathrm{Assets}\mathrm{to}\mathrm{Debt}\mathrm{Ratio}=\frac{\mathrm{Total}\mathrm{Assets}}{\mathrm{Debt}} \\ \mathrm{Total}\mathrm{Assets}=\mathrm{Fixed}\mathrm{Assets}+\mathrm{Current}\mathrm{Assets} \\ =\mathrm{Rs}(75,00,000+40,00,000) \\ =\mathrm{Rs}1,15,00,000 \\ \mathrm{Debt}=\mathrm{Rs}80,00,000 \\ \mathrm{Total}\mathrm{Assets}\mathrm{to}\mathrm{Debt}\mathrm{Ratio}=\frac{1,15,00,000}{80,00,000}=1.44:1 \end{gathered}$$