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    Question

    From the following, calculate the Debt to Equity

    Ratio: Share Capital: ₹5,00,000; Reserves: ₹3,00,000; Long-term Borrowings: ₹4,00,000; Current Liabilities: ₹2,00,000.
    A 0.5:1 Correct Answer Incorrect Answer
    B 0.67:1 Correct Answer Incorrect Answer
    C 0.75:1 Correct Answer Incorrect Answer
    D 0.8:1 Correct Answer Incorrect Answer

    Solution

    Debt to Equity Ratio = Long-term Debt / Shareholders' Funds. Long-term Debt = ₹4,00,000. Shareholders' Funds = Share Capital + Reserves = 5,00,000 + 3,00,000 = ₹8,00,000. Ratio = 4,00,000 / 8,00,000 = 0.5 : 1.

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