Question : From the calculated total assets to debt ratio. Shareholders’ funds Rs. 2,40,000 Total Debts (Liabilities) Rs. 46,00,000 Short-term debts (Current Liabilities) = Rs. 2,00,000.
Option 1: 1.5:1
Option 2: 1.05:1
Option 3: 1.52:1
Option 4: None of the above
Correct Answer: 1.05:1
Solution : Total Assets to debt ratio = Total Assets / Long term Debts = 48,40,000 / 46,00,000 = 1.05 : 1 Long-term debts = total debts (Liabilities) − Short term debt (Current Liabilities) = 48,00,000 − 2,00,000 = 46,00,000 Total assets = shareholder funds + total debts (liabilities)= 2,40,000 + 46,00,000= 48,40,000. Hence option 2 is the correct answer.
Question : Shareholders' Funds Rs. 14,00,000; Total Debts (Liabilities) Rs. 18,00,000; Current Liabilities Rs. 2,00,000. Total Assets to Debt Ratio will be
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