Question

Q. calculate Debt to equity Ration from the following information :
Rs. Rs.
Fixed assets (Gross) 8,40,000 Current Assets 3,50,000
Accumulated Depreciation 1,40,000 Current Liabilities 2.80.000
Non-Current Investment 14,000 10% Long -term Borrowings 4,20,000
Long term loans and advances 56,000 Long -term Provisions 1,40,000

Answer 1

Dear Student,

$$\begin{gathered} DebtEquityRatio=\frac{Debt}{Equity} \\ Debt=Longtermborrowings+Longtermprovision=4,20,000+1,40,000=Rs.5,60,000 \\ Equity=TotalAssets-OutsideLiabilities \\ =7,00,000\left(8,40,000-1,40,000\right)+14,000+56,000+3,50,000-2,80,000-4,20,000-1,40,000=Rs.2,80,000 \\ DebtEquityRatio=\frac{5,60,000}{2,80,000}=2:1 \end{gathered}$$

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