Question

Total Debt ₹12,00,000; Current Liabilities ₹4,00,000; Capital Employed ₹`12,00,000. Calculate Total Assets to Debt Ratio.

Answer 1

$\begin{array}{l}\text{Debt}=\text{Total Debt}-\text{Current Liabilities}=12,00,000-4,00,000=\text{Rs 8,00,000}\\ \text{Total Assets}=\text{Capital Employed+ Current Liabilities}\\ =12\text{,00,000}+4\text{,00,000}=\text{Rs 16,00,000}\\ \mathrm{Total}\mathrm{}\mathrm{Assets}\mathrm{}\mathrm{to}\mathrm{}\mathrm{Debt}\mathrm{}\mathrm{Ratio}\mathrm{}=\frac{\mathrm{Total}\mathrm{}\mathrm{Assets}}{\mathrm{Debt}}\\ \text{=}\frac{16,00,000}{8,00,000}=2:1\end{array}$