accounting ratios, class XII

Dear student. Return on investment = net profit before interest and tax / capital employed*100,. Net profit before interest and tax = 600000/60*100+100000 = 1100000. Return on investment = 1100000/8000000 *100 = 13.75%. Debt to equity ratio= long term debt/shareholder's funds. Long term debt = 10% debentures=1000000. And shareholder's funds = Capital employed - Long term debt. shareholder's funds = 7000000. Debt to equity ratio= 1000000/7000000 =1:7. Regards