Question

Select the appropriate answer from the alternatives given below & rewrite the completed statements :

The relationship between net profit before Tax, interest and dividend and capital employed is known from _____________.
a) Current Ratio
b) Quick Ratio
c) ROI
d) ROCE

Answer 1

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.