Question

Total Debt ₹12,00,000; Shareholders' Funds ₹2,00,000; Reserves and Surplus ₹50,000; Current Assets ₹5,00,000; Working Capital ₹1,00,000. Calculate Total Assets to Debt Ratio.

Answer 1

$\begin{array}{l}\text{Working Capital}=\text{Current Assets}-\text{Current Liabilities}\\ \text{1,00,000}=\text{5,00,000}-\text{Current Liabilities}\\ \text{Current Liabilities}=\text{Rs 4,00,000}\\ \text{Debt}=\text{Total Debt}-\text{Current Liabilities}=\text{12,00,000 - 4,00,000 = Rs 8,00,000}\\ \text{Total Assets}=\text{Shareholders' Funds+ Total Debt}\\ =\text{2,00,000}+\text{12,00,000}=\text{Rs 14,00,000}\\ \mathrm{Total}\mathrm{}\mathrm{Assets}\mathrm{}\mathrm{to}\mathrm{}\mathrm{Debt}\mathrm{}\mathrm{Ratio}\mathrm{}=\frac{\mathrm{Total}\mathrm{}\mathrm{Assets}}{\mathrm{Debt}}\\ \text{=}\frac{14,00,000}{8,00,000}=1.75:1\end{array}$