Question : Equity Share Capital Rs.4,00,000; General Reserve Rs.2,40,000;Debentures Rs.3,20,000; Current Liabilities Rs.80,000
On the above information find out the Debt-Equity Ratio.
Option 1: 1:2
Option 2: 1:3
Option 3: 1:4
Option 4: None of the above
Answer (1)
22nd Jan, 2024
Correct Answer: 1:2
Solution :
Debt-Equity Ratio = Debt / Equity
Debt =3,20,000
Equity = Equity Share Capital + General Reserve
Equity = 4,00,000+2,40,000=6,40,000
Debt-Equity Ratio = 3,20,000/6,40,000=1:2
Hence option 1 is the correct answer.
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