Question

Calculate Debt to Equity Ratio from the following information:

	₹			₹
Fixed Assets (Gross)	8,40,000		Current Assets	3,50,000
Accumulated Depreciation	1,40,000		Current Liabilities	2,80,000
Non-current Investments	14,000		10% Long-term Borrowings	4,20,000
Long-term Loans and Advances	56,000		Long-term Provisions	1,40,000

Answer 1

$\begin{array}{l}\text{Debt}=\text{Long Term Borrowings}+\text{Long Term Provisions}\\ \text{=\hspace{0.17em}4,20,000+1,40,000\hspace{0.17em}=\hspace{0.17em}Rs 5,60,000}\\ \text{Equity}=\text{Total Assets\hspace{0.17em}-\hspace{0.17em}Total Debts}\\ \text{=\hspace{0.17em}(8,40,000\hspace{0.17em}-1,40,000+14,000+56,000+3,50,000)\hspace{0.17em}- (4,20,000 -1,40,000\hspace{0.17em}-2,80,000)= Rs 2,80,000}\\ \mathrm{Debt}\mathrm{}\mathrm{to}\mathrm{}\mathrm{Equity}\mathrm{}\mathrm{Ratio}=\frac{\mathrm{Debt}}{\mathrm{Equity}}\\ \text{=}\frac{5,60,000}{2,80,000}=2:1\end{array}$