WHILE CALCULATING RETURN ON EQUITY IN ELECTRICITY CHAPTER WHAT RATE HAS TO BE TAKEN TO MULTIPLY THE AVERAGE EQUITY SO AS TO GET RETURN ON EQUITY.
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New electricity chapter
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even m also confused.i think its 14% but m not sure.
In electricity chapter of Accounts no topic i found in my notes regarding your Query....
Please Elaborate
ASHWINI in new study material electricity chapter has been totally changed.In that chapter there are topics known as return on equity,average capital cost,depreciation,advance against dep.ALSO THERE IS A QUESTION IN RTP NOV.2013 ABT CALCULATING AVG CAPITAL COST & DEPRECIATION.MY DOUBT is ABOUT RETURN ON EQUITY.IN STUDY MAT RATE OF RETURN ON EQUITY IS 23 %(APPX) BUT IN SOME BOOKS IT IS SOLVED WITH 14 %.
WHICH 1 IS RIGHT.
WHILE CALCULATING RETURN ON EQUITY IN ELECTRICITY CHAPTER WHAT RATE ?
& how it is calculated
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The pre tax fixed profit is to be considered as 18% thereby calculate 30% corporate tax therefore it ll be 23.4% and the same is considered even in study material...
shrikanth please elaborate.
hey sorry tat is wrong wat i mentioned..
actual calculation is
Return on equity is calculated by below formula i.e,
Base rate/ 1-t
therefore Base rate specified by electricity co is 15.5% and t is tax rate 30% + 10% surcharge i.e, 33% on this add 3% cess which sumsup to 33.99%
now (15.5/1-0.3399)=23.481%
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