From the following information related to Wise Ltd., calculate: (c) Super profit Net tangible assets ₹ 600 lakh Operational Revenue ₹ 1,120 lakh Employment Cost (including one time payment of ₹ 40 lakh, not likely to occ

CS Professional · Corporate Restructuring, Insolvency, Liquidation & Winding-up · PYQS · June 2023
From the following information related to Wise Ltd., calculate: (c) Super profit Net tangible assets ₹ 600 lakh Operational Revenue ₹ 1,120 lakh Employment Cost (including one time payment of ₹ 40 lakh, not likely to occur in future) ₹ 220 lakh Managerial Remunerations (to be increased by ₹ 20 lakh from next year) ₹ 80 lakh Cost of goods sold ₹ 460 lakh Finance charges ₹ 160 lakh Depreciation/Amortization ₹ 60 lakh Tax provision is to be made @ 25%. Expected rate of return on assets is to be assumed @ 30%.

Answer & Explanation:

(c) Computation of Super Profit (i) Future Maintainable Profit PBT 140.00 Add: Employment Cost one-time payment not likely to occur in future 40.00 Less: Increase in Managerial Remuneration from next year 20.00 160 Less: Taxes @ 25% 40.00 Future Maintainable Profit 120.00 (ii) Super Profit Expected return on assets (₹ 600 lakh * 30%) 180.00 Less: Future Maintainable Profit 120.00 Super Profit 60.00

Topics: Financial Analysis

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