Question
What is the Debt equity of the
company?Solution
Debt Equity Ratio = Debt/Shareholders fund Debt taken here is long term debt = debentures of Rs.10,00,000 Shareholder funds = Equity share + preference shares + capital reserve – preliminary expenses                                    = 20,00,000 + 8,00,000 + 14,00,000 – 2,40,000                                    = 39,60,000 Thus, Debt/Equity ratio = 10,00,000/41,60,000 = 0.25
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