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Debt to Equity Ratio

Debt-equity r...

Question

Debt-equity ratio is a sub-part of _______.

A

Short-term solvency ratio

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B

Long-term solvency ratio

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C

Debtors turnover ratio

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D

None of these

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Solution

The correct option is B
Long-term solvency ratio

Debt-equity ratio is a sub-part of long term solvency ratio.

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Similar questions

Q. ratio determines the short term solvency of a business.

Q. Which of the following are solvency ratios?
a. Debt equity ratio
b. Total fixed assets to debt ratio
c. Debt ratio
d. Interest coverage ratio

Q. Which of the following is correct?
i.Liquidity ratios measure long term solvency of a concern.
ii.Inventory is a part of current assets.
iii.Rule of thumb for acid test ratio is 1 : 1.
iv.The amount of gross assets is equal to net capital employed.

The following Balance Sheet and other information, calculate following ratios:

(i) Debt Equity Ratio (ii) Working Capital Turnover Ratio (iii) Debtors Turnover Ratio

Liabilities	Amount Rs	Assets	Amount Rs
General Reserve	80,000	Preliminary Expenses	20,000
Profit and Loss	1,20,000	Cash	1,00,000
Loan @15%	2,40,000	Stock	80,000
Bills Payable	20,000	Bills Receivables	40,000
Creditors	80,000	Debtors	1,40,000
Share Capital	2,00,000	Fixed Assets	3,60,000
	7,40,000		7,40,000

Q. Debt-equity ratio is sub-part of ____________.

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