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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 debt to total assets ratio of the

    company?
    A 0.21 Correct Answer Incorrect Answer
    B 0.23 Correct Answer Incorrect Answer
    C 0.34 Correct Answer Incorrect Answer
    D 0.26 Correct Answer Incorrect Answer

    Solution

    Total assts ratio : Total Debt/Total Assets =600,000 / 23,34,000 = 0.26 Debt= 2,50,000(Loan from Bank) +3,50,000 (Debentures) = 6,00,000 Total assets: Building + Plant & Machinery+ Land + Stock + Debtors + Cash 5,00,000+4,50,000+6,00,000+4,20,000+3,40,000+24,000 =23,34,000

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