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    Question

    Read the following information to answer the below

    questions: Net Sales = 40,00,000 (20 % GP Element) out of which 40% is on credit. Opening Inventories were 60 % of closing inventories. Opening Receivables are 120,000. Calculate Capital Gearing Ratio of the company?
    A 0.61 Correct Answer Incorrect Answer
    B 1.02 Correct Answer Incorrect Answer
    C 1.20 Correct Answer Incorrect Answer
    D 0.97 Correct Answer Incorrect Answer

    Solution

    Capital Gearing Ratio: Preference Share Capital + Debentures + Other borrowed funds/Equity Share Capital + Reverses & Surplus - Losses 4,00,000+3,50,000+2,50,000 / 800,000+1,50,000+76,000-15000-27000 =10,00,000/9,84,000 =1.02

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