Question
Compute the Total Assets to Debt Ratio from the
following information: Share Capital: ₹12,00,000 Reserves and Surplus: ₹8,00,000 Long-term Borrowings: ₹25,00,000 Long-term Provisions: ₹5,00,000 Current Liabilities: ₹10,00,000Solution
The Total Assets to Debt Ratio is calculated using the formula: Total Assets to Debt Ratio = Total Assets / Debt Calculation of Total Assets: Total Assets = Share Capital + Reserves and Surplus + Long-term Borrowings + Long-term Provisions + Current Liabilities Total Assets = ₹12,00,000 + ₹8,00,000 + ₹25,00,000 + ₹5,00,000 + ₹10,00,000 = ₹60,00,000 Calculation of Debt: Debt = Long-term Borrowings + Long-term Provisions Debt = ₹25,00,000 + ₹5,00,000 = ₹30,00,000 Total Assets to Debt Ratio = ₹60,00,000 / ₹30,00,000 = 2 : 1
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