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Tha average capital employed in Anjali and co. is Rs.80,00,000 whereas tha net trading profits for the last three years were Rs.12,60,000,Rs.13,50,000 and Rs.14,22,000.In the past three years, the managing Director was paid a remuneration of Rs.10,000 p.m.But now he would be entitled to receive Rs.12,000 p.m. The reasonable rate of return expected in the industru in which Anjali Ltd. Operate is 15%.?
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Tha average capital employed in Anjali and co. is Rs.80,00,000 whereas...
Solution:
Calculation of Average Profits:
- The net trading profits for the last three years were: Rs.12,60,000, Rs.13,50,000 and Rs.14,22,000.
- The average net trading profit for the past three years can be calculated as follows:
= (12,60,000 + 13,50,000 + 14,22,000) / 3
= Rs.13,10,666.67
Calculation of Average Capital Employed:
- The average capital employed in Anjali and co. is Rs.80,00,000.
Calculation of Managing Director's Remuneration:
- In the past three years, the Managing Director was paid a remuneration of Rs.10,000 p.m.
- Now, he would be entitled to receive Rs.12,000 p.m.
Calculation of Reasonable Rate of Return:
- The reasonable rate of return expected in the industry in which Anjali Ltd. operates is 15%.
Calculation of Return on Capital Employed:
- Return on Capital Employed (ROCE) can be calculated as follows:
ROCE = (Net Trading Profits / Average Capital Employed) x 100
= (13,10,666.67 / 80,00,000) x 100
= 16.38%
Calculation of Return on Capital Employed after Deduction of Managing Director's Remuneration:
- Return on Capital Employed after Deduction of Managing Director's Remuneration can be calculated as follows:
ROCE after Deduction of Managing Director's Remuneration = [(Net Trading Profits - Managing Director's Remuneration) / Average Capital Employed] x 100
= [(13,10,666.67 - (12,000 x 12)) / 80,00,000] x 100
= 15.38%
Comparison of Return on Capital Employed and Reasonable Rate of Return:
- Return on Capital Employed (16.38%) is greater than the reasonable rate of return (15%) expected in the industry.
- Therefore, Anjali Ltd. is earning returns that are higher than the expected returns in the industry.
Conclusion:
Anjali Ltd. has been earning higher returns than the expected returns in the industry. However, after deducting the Managing Director's increased remuneration, the returns have decreased slightly but are still higher than the expected returns.
Calculation of Average Profits:
- The net trading profits for the last three years were: Rs.12,60,000, Rs.13,50,000 and Rs.14,22,000.
- The average net trading profit for the past three years can be calculated as follows:
= (12,60,000 + 13,50,000 + 14,22,000) / 3
= Rs.13,10,666.67
Calculation of Average Capital Employed:
- The average capital employed in Anjali and co. is Rs.80,00,000.
Calculation of Managing Director's Remuneration:
- In the past three years, the Managing Director was paid a remuneration of Rs.10,000 p.m.
- Now, he would be entitled to receive Rs.12,000 p.m.
Calculation of Reasonable Rate of Return:
- The reasonable rate of return expected in the industry in which Anjali Ltd. operates is 15%.
Calculation of Return on Capital Employed:
- Return on Capital Employed (ROCE) can be calculated as follows:
ROCE = (Net Trading Profits / Average Capital Employed) x 100
= (13,10,666.67 / 80,00,000) x 100
= 16.38%
Calculation of Return on Capital Employed after Deduction of Managing Director's Remuneration:
- Return on Capital Employed after Deduction of Managing Director's Remuneration can be calculated as follows:
ROCE after Deduction of Managing Director's Remuneration = [(Net Trading Profits - Managing Director's Remuneration) / Average Capital Employed] x 100
= [(13,10,666.67 - (12,000 x 12)) / 80,00,000] x 100
= 15.38%
Comparison of Return on Capital Employed and Reasonable Rate of Return:
- Return on Capital Employed (16.38%) is greater than the reasonable rate of return (15%) expected in the industry.
- Therefore, Anjali Ltd. is earning returns that are higher than the expected returns in the industry.
Conclusion:
Anjali Ltd. has been earning higher returns than the expected returns in the industry. However, after deducting the Managing Director's increased remuneration, the returns have decreased slightly but are still higher than the expected returns.
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Tha average capital employed in Anjali and co. is Rs.80,00,000 whereas tha net trading profits for the last three years were Rs.12,60,000,Rs.13,50,000 and Rs.14,22,000.In the past three years, the managing Director was paid a remuneration of Rs.10,000 p.m.But now he would be entitled to receive Rs.12,000 p.m. The reasonable rate of return expected in the industru in which Anjali Ltd. Operate is 15%.?
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Tha average capital employed in Anjali and co. is Rs.80,00,000 whereas tha net trading profits for the last three years were Rs.12,60,000,Rs.13,50,000 and Rs.14,22,000.In the past three years, the managing Director was paid a remuneration of Rs.10,000 p.m.But now he would be entitled to receive Rs.12,000 p.m. The reasonable rate of return expected in the industru in which Anjali Ltd. Operate is 15%.? for Class 12 2025 is part of Class 12 preparation. The Question and answers have been prepared according to the Class 12 exam syllabus. Information about Tha average capital employed in Anjali and co. is Rs.80,00,000 whereas tha net trading profits for the last three years were Rs.12,60,000,Rs.13,50,000 and Rs.14,22,000.In the past three years, the managing Director was paid a remuneration of Rs.10,000 p.m.But now he would be entitled to receive Rs.12,000 p.m. The reasonable rate of return expected in the industru in which Anjali Ltd. Operate is 15%.? covers all topics & solutions for Class 12 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Tha average capital employed in Anjali and co. is Rs.80,00,000 whereas tha net trading profits for the last three years were Rs.12,60,000,Rs.13,50,000 and Rs.14,22,000.In the past three years, the managing Director was paid a remuneration of Rs.10,000 p.m.But now he would be entitled to receive Rs.12,000 p.m. The reasonable rate of return expected in the industru in which Anjali Ltd. Operate is 15%.?.
Tha average capital employed in Anjali and co. is Rs.80,00,000 whereas tha net trading profits for the last three years were Rs.12,60,000,Rs.13,50,000 and Rs.14,22,000.In the past three years, the managing Director was paid a remuneration of Rs.10,000 p.m.But now he would be entitled to receive Rs.12,000 p.m. The reasonable rate of return expected in the industru in which Anjali Ltd. Operate is 15%.? for Class 12 2025 is part of Class 12 preparation. The Question and answers have been prepared according to the Class 12 exam syllabus. Information about Tha average capital employed in Anjali and co. is Rs.80,00,000 whereas tha net trading profits for the last three years were Rs.12,60,000,Rs.13,50,000 and Rs.14,22,000.In the past three years, the managing Director was paid a remuneration of Rs.10,000 p.m.But now he would be entitled to receive Rs.12,000 p.m. The reasonable rate of return expected in the industru in which Anjali Ltd. Operate is 15%.? covers all topics & solutions for Class 12 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Tha average capital employed in Anjali and co. is Rs.80,00,000 whereas tha net trading profits for the last three years were Rs.12,60,000,Rs.13,50,000 and Rs.14,22,000.In the past three years, the managing Director was paid a remuneration of Rs.10,000 p.m.But now he would be entitled to receive Rs.12,000 p.m. The reasonable rate of return expected in the industru in which Anjali Ltd. Operate is 15%.?.
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Tha average capital employed in Anjali and co. is Rs.80,00,000 whereas tha net trading profits for the last three years were Rs.12,60,000,Rs.13,50,000 and Rs.14,22,000.In the past three years, the managing Director was paid a remuneration of Rs.10,000 p.m.But now he would be entitled to receive Rs.12,000 p.m. The reasonable rate of return expected in the industru in which Anjali Ltd. Operate is 15%.?, a detailed solution for Tha average capital employed in Anjali and co. is Rs.80,00,000 whereas tha net trading profits for the last three years were Rs.12,60,000,Rs.13,50,000 and Rs.14,22,000.In the past three years, the managing Director was paid a remuneration of Rs.10,000 p.m.But now he would be entitled to receive Rs.12,000 p.m. The reasonable rate of return expected in the industru in which Anjali Ltd. Operate is 15%.? has been provided alongside types of Tha average capital employed in Anjali and co. is Rs.80,00,000 whereas tha net trading profits for the last three years were Rs.12,60,000,Rs.13,50,000 and Rs.14,22,000.In the past three years, the managing Director was paid a remuneration of Rs.10,000 p.m.But now he would be entitled to receive Rs.12,000 p.m. The reasonable rate of return expected in the industru in which Anjali Ltd. Operate is 15%.? theory, EduRev gives you an
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