Question : Equity Share Capital Rs.35,00,000; Reserve Rs.15,00,000; Debentures Rs.10,00,000; Current Liabilities Rs.8,00,000. What will be debt-equity ratio?
Option 1: 1:2
Option 2: 1:3
Option 3: 1:5
Option 4: 1:4
Answer (1)
24th Jan, 2024
Correct Answer: 1:5
Solution :
Equity = Equity Share Capital + General Reserve + Accumulated Profits.
Equity = 35,00,000+15,00,000 = 50,00,000
Debt = 10,00,000
Debt-equity ratio = Debt/Equity
Debt-equity ratio = 10,00,000/50,00,000=1:5
Hence 3 is the correct answer.
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