A company earns profit after tax of Rs. 240,000 on average total assets of Rs. 2,000,000. What is its return on assets?
Correct answer: C. 12%
- A. 8%
- B. 10%
- C. 12%
- D. 15%
Explanation
Return on assets equals profit after tax divided by average total assets, multiplied by 100. The calculation is Rs. 240,000 divided by Rs. 2,000,000, giving 12%.
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About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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