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Question

From the following information, calculate Debt to Equity Ratio:
10,000 Equity Shares of ₹ 10 each fully paid 1,00,000
5,000; 9% Preference Shares of ₹ 10 each fully paid 50,000
General Reserve 45,000
Surplus, i.e., Balance in Statement of Profit and Loss 20,000
10% Debentures 75,000
Current Liabilities 50,000

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Solution

Long-Term Debt = Debentures = Rs 75,000
Shareholder’s Funds = Equity Share Capital + Preference Share Capital + General Reserve + Surplus
= Rs 1,00,000 + Rs 50,000 + Rs 45,000 + Rs 20,000 = Rs 2,15,000



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