Question

Total Debt ₹15,00,000; Current Liablities ₹5,00,000; Capital Employed ₹15,00,000. Calculate Total Assets to Debt Ratio.

Answer 1

$\text{Total Assets to Debt Ratio =}\frac{\text{Total Assets}}{\text{Long Term Debt}}$

Capital Employed = Total Assets – Current Liabilities
15,00,000 = Total Assets – 5,00,000
Total Assets = Rs 20,00,000
Long Term Debt = Total Debt – Current Liabilities
= 15,00,000 – 5,00,000
= Rs 10,00,000

$\text{Total Assets to Debt Ratio =}\frac{\text{20},00\text{,000}}{\text{10,00},\text{000}}\text{= 2 : 1}$