Return on equity capital ratio is obtained by dividing net profit after tax and before dividend by .

Shareholder's funds

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Current assets

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Total assets

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None of the above

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Solution

The correct option is B Shareholder's funds
Return on Equity (ROE) = [Net profit after tax (NPAT) - Preference dividend (if any)] / Shareholder's funds
Example:
NPAT = $R s . 100000$ and Shareholder's funds = $R s .500000$
Then, ROE = $[100000 - 0] / 500000$
= $0.2$ or $20 %$ .

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Similar questions

Net Profit before interest and tax Rs. 80,000; Equity share capital of Rs. 1,20,000; 10% Preference Share Capital of Rs. 50,000; 12% Debentures Rs. 1,00,000; Reserves and Surplus Rs. 1,30,000; Tax rate 50%; Calculate Return on Investment.

Q. Net Profit before Interest and Tax ₹2,50,000; Capital Employed ₹10,00,000. Calculate Return on Investment.

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

Q. Following is the extract from the Balance Sheet of Zee Ltd.:

Particular	31^st March 2019 (₹)	31^st March 2018 (₹)
Equity Share Capital	8,00,000	8,00,000
10% Preference Share Capital	6,00,000	6,00,000
Surplus i.e., Balance in Statement of Profit and Loss	7,20,000	4,00,000
Unpaid Dividend	20,000	–

Additional Information:
(i) Proposed dividend on equity shares for the year 2017-18 and 2018-19 are ₹ 1,60,000 and ₹ 2,00,000 respectively.
(ii) An Interim Dividend of ₹ 40,000 on Equity Shares was paid.
Calculate Net Profit before Tax and Extraordinary Items.

Q. When net profit is Rs

2, 25, 000

, taxes are Rs

25, 000

and Net worth Rs10,00,000$. What is the rate of return on share holder's equity?

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Return on equity capital ratio is obtained by dividing net profit after tax and before dividend by .

The correct option is B Shareholder's fundsReturn on Equity (ROE) = [Net profit after tax (NPAT) - Preference dividend (if any)] / Shareholder's fundsExample: NPAT = Rs.100000 and Shareholder's funds = Rs.500000Then, ROE = [100000−0]/500000 = 0.2 or 20%.

The correct option is B Shareholder's funds
Return on Equity (ROE) = [Net profit after tax (NPAT) - Preference dividend (if any)] / Shareholder's funds
Example:
NPAT = $R s . 100000$ and Shareholder's funds = $R s .500000$
Then, ROE = $[100000 - 0] / 500000$
= $0.2$ or $20 %$ .