Experts what is the answer of this one
Dear Student
we can use Return on Capital employed RATIO from given information.
Return on capital employed= Profit before Interest tax and dividend/ capitals employed × 100
P= 100,000/40,00,000 × 100 = 2.5%
Q= 120000/50,00,000 ×100 = 2.4%
R= 90,000/60,00,000 ×100= 1.5%
S= 1,40,000/70,00,000 ×100 = 2%
Best segment is P. It has higher ratio than other segment.
R segment should be discarded because it has lowest ratio.
Regards
we can use Return on Capital employed RATIO from given information.
Return on capital employed= Profit before Interest tax and dividend/ capitals employed × 100
P= 100,000/40,00,000 × 100 = 2.5%
Q= 120000/50,00,000 ×100 = 2.4%
R= 90,000/60,00,000 ×100= 1.5%
S= 1,40,000/70,00,000 ×100 = 2%
Best segment is P. It has higher ratio than other segment.
R segment should be discarded because it has lowest ratio.
Regards