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    Question

    What is the Debt equity of the

    company?
    A 0.29 Correct Answer Incorrect Answer
    B 0.30 Correct Answer Incorrect Answer
    C 0.25 Correct Answer Incorrect Answer
    D 0.24 Correct Answer Incorrect Answer
    E 0.32 Correct Answer Incorrect Answer

    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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