Question

    Calculate Debt Equity Ratio

    I. Equity and Liabilities:

    1. Shareholders’ funds

    a) Share capital 4,00,000

    b) Reserves and surplus 1,00,000

    2. Non-current Liabilities

    Long-term borrowings 1,50,000

    3. Current Liabilities 50,000

    7,00,000

    II. Assets

    1. Non-current Assets

    a) Fixed assets 4,00,000

    b) Non-current investments 1,00,000

    2. Current Assets 2,00,000

    A 0.2:1 Correct Answer Incorrect Answer
    B 0.3:1 Correct Answer Incorrect Answer
    C 0.5:1 Correct Answer Incorrect Answer
    D 0.75:1 Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    Debt-Equity Ratio =Debts/Equity Debt = Long-term borrowings = Rs. 1,50,000 Equity = Share capital + Reserves and surplus = Rs. 4,00,000 + Rs. 1,00,000 = Rs. 5,00,000 Debt-Equity Ratio =Rs. 1,50,000/Rs. 5,00,000 = 0.3 : 1

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