Question 30 of 38
Q.
From the following information, calculate debt-equity ratio :
Balance sheet (Extract) as on 31.03.2018
| Particulars | ₹ |
|---|---|
| I. EQUITY AND LIABILITIES | |
| 1. Shareholders' funds | |
| (a) Share capital — Equity Share Capital | 1,00,000 |
| (b) Reserves and Surplus | 60,000 |
| 2. Non-current liabilities — Long-term borrowings (Debentures) | 80,000 |
| 3. Current Liabilities | |
| (a) Trade payables | 50,000 |
| (b) Other current liabilities — Outstanding expenses | 30,000 |
| Total | 3,20,000 |
Puducherry TnboardTamil Nadu HSC (DGE) Commerce Board 2024Subjective· 3mImportance★★★★★
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Start your 14-day free trial to unlock the full solution →Debt-Equity Ratio = Long-term Debt ÷ Shareholders' Funds = 80,000 ÷ 1,60,000 = 0.5 : 1.
Formula: Debt-Equity Ratio = Long-term Debt ÷ Shareholders' Funds
Step 1 — Long-term Debt. Only non-current liabilities count. Trade payables and outstanding expenses are current liabilities, so they are excluded.
- Long-term borrowings (Debentures) = ₹80,000
Step 2 — Shareholders' Funds (Equity).
| Item | ₹ |
|---|---|
| Equity Share Capital | 1,00,000 |
| Reserves and Surplus | 60,000 |
| Shareholders' funds | 1,60,000 |
Step 3 — Ratio. …
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