Question MCS 2010 Vimal Eneterprises's Profit & Loss A/c for the year 2009-2010 is given below:

Rs in lacs Sales 500 Variable Cost 350 Contribution 150 Fixed Cost 40 Depreciation 30 PBIT 80 Interest 15 PBT 65 Tax @ 40% 40% 26 PAT 39 The company's Balance Sheet is given below: Rs in lacs Equity 300 15% Debt 100 400 1 a b c 2

Fixed Assets Net Working Capital

Rs in lacs 300 100 400

2 a b c

Calculate : Return on Equity, and Return on Capital Employed EVA Vimal would like to expand its operations. It would purchase Fixed Assets worth Rs. 100 lacs and invest in working capital of Rs. 100 lacs. Fixed Assets are financed by equity. Working capital is financed by 15% Debt. The Sales will increase by 40%. Variable cost to selling price ratio will reduce by 5%. Fixed cost other than depreciation will increase by 5%. Depreciation is on Straight Line method. Calculate: ROE and ROCE post expansion Also calculate Total Asset turnover post expansion Post expansion EVA