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    Question

    Read the following information to answer the below questions:   Net Sales = 40,00,000 (20 % GP Element) out of which 40% is on credit. Opening Inventories were 60 % of closing inventories. Opening Receivables are 120,000.   

    Calculate the Debt Equity ratio of the company?

    A 0.45 Correct Answer Incorrect Answer
    B 0.43 Correct Answer Incorrect Answer
    C 0.40 Correct Answer Incorrect Answer
    D 0.55 Correct Answer Incorrect Answer

    Solution

    D/E ratio= Debt/Shareholders fund D/E ratio = 6,00,000 / 13,84,000 =0.43 Debt= 2,50,000(Loan from Bank) +3,50,000 (Debentures) = 6,00,000 Equity Shareholders fund : Equity Share capital+ Preference share capital + General Reserve + P & L– Preliminary Expenses -Losses not written off =8,00,000 + 4,00,000 + 1,50,000 + 76,000 -15,000 -27,000 =13,84,000

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