The ratio illustrates that how much return is earned in the form of Net profit after taxes out of the total capital employed. The capital employed is nothing but the combination of both non current liabilities and owners’ equity. The ratio expresses the relationship in between the total earnings after taxation and the total volume of capital employed.
Return on total capital employed= (Net profit after taxes × 100/ Total capital employed)
Standard norm of the ratio
Higher the ratio is better the utilization of the long term funds raised under the capital structure means that greater profits are earned out of the total capital employed.
Activity turnover ratio: It highlights the relationship in between the sales and various assets. The ratio indicates that the rate of speed which is taken by the firm for converting the assets into sales.
Accounts and Finance for Managers Related Tutorials
Accounts And Finance For Managers Tutorial
Financial Statement Analysis
Fund Flow Statement Analysis
Cash Flow Statement Analysis
Cost Accounting & Preparation Of Cost Statement
Time Value Of Money
Sources Of Long Term Finance
Capital Market Developments In India
Indian Financial System
Sebi In Capital Market Issues
Risk And Return
Cost Of Capital
Capital Structure Theories
Working Capital Management
All rights reserved © 2018 Wisdom IT Services India Pvt. Ltd
Wisdomjobs.com is one of the best job search sites in India.