n NISM Certifications
XV NISM Series XV
Medium

An organization has a Debt-to-Equity ratio of 2:1. Debt = Rs 800,000, ROE = 25%. Calculate Net Profit.

Practice question from NISM XV Mock Test 4 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Rs 400,000

  2. B

    Rs 350,000

  3. C

    Rs 200,000

  4. Rs 100,000

    Correct answer

Why this is the answer

Equity = ½ of Debt = 400,000. Net Profit = ROE × Equity = 0.25 × 400,000 = Rs 100,000.

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