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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


Team Careers360 21st Jan, 2024
Answer (1)
Team Careers360 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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