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3.14 Analysis of Financial Statements—CBSE XII
Cost of Revenue from Operations
Solution: Inventory Turnover Ratio =
Average Inventory
` 20,00,000
= ` 2,50,000  8 Times .
Working Notes:
1. Cost of Revenue from Operations = Cost of Materials Consumed + Changes in Inventories of
Finished Goods and Work-in-Progress + Direct Expenses
= ` 18,00,000 – ` 1,00,000 + ` 3,00,000 = ` 20,00,000.

Opening Inventory + Closing Inventory
2. Average Inventory =
2
1
= 2 (` 2,00,000 + ` 3,00,000) = ` 2,50,000.
Illustration 9.
From the following Balance Sheet of Sure Success Ltd. as at 31st March, 2024, calculate
Return on Investment:

Particulars 31st March,
2024
`
I. Equity and Liabilities
1. Shareholders’ Funds
(a) Share Capital:
50,000 Equity Shares of ` 10 each 5,00,000
5,000; 9% Preference Shares of ` 10 each 50,000
(b) Reserves and Surplus:

Surplus, i.e., Balance in Statement of Profit & Loss 1,25,000
2. Non-Current Liabilities
Long-term Borrowings (12% Debentures) 4,00,000
3. Current Liabilities (Trade Payables) 1,70,000
Total 12,45,000
II. Assets
1. Non-Current Assets
(a) Property, Plant and Equipment and Intangible Assets:
— Property, Plant and Equipment 11,50,000
Less: Accumulated Depreciation 2,00,000 9,50,000
(b) Non-current Investment:
10% Trade Investment 50,000
10% Other Investment (Face Value ` 35,000) 25,000
2. Current Assets 2,20,000
Total 12,45,000
Additional Information:
Net Profit after Interest and Tax for the year ended 31st March, 2024 was ` 1,21,500;
Tax Rate: 40%.
Solution:
Net Profit before Interest, Tax and Dividend (WN 1)
Return on Investment (ROI) =  100
Capital Employed
` 2,47,000
=  100 = 23.52%.
` 10,50,000