Calculate debt ratio, from the following information:
Total external liabilities = Rs. 5,00,000
Balance sheet total = Rs. 10,10,000
Current liabilities = Rs. 1,00,000
Fictitious assets = Rs. 10,000

0.444

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0.488

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0.499

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0.469

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Solution

The correct option is A 0.444
Long-term debt = Total external liabilities - Current liabilities
= Rs. 5,00,000 - Rs. 1,00,000
= Rs. 4,00,000
Total non-fictitious assets = Total assets - Fictitious assets
= Rs. 10,10,000 - Rs. 10,000
= Rs. 10,00,000
Net assets = Total non-fictitious assets - Current liabilities
= Rs. 10,00,000 - Rs. 1,00,000
= Rs. 9,00,000
Debt ratio = Debt/Net assets
= Rs. 4,00,000/Rs. 9,00,000
= 0.444

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Calculate debt ratio, from the following information:Total external liabilities = Rs. 5,00,000Balance sheet total = Rs. 10,10,000Current liabilities = Rs. 1,00,000Fictitious assets = Rs. 10,000

Calculate debt ratio, from the following information:
Total external liabilities = Rs. 5,00,000
Balance sheet total = Rs. 10,10,000
Current liabilities = Rs. 1,00,000
Fictitious assets = Rs. 10,000