Question : Share Capital 12,00,000; Reserves and Surplus 8,00,000; Long-term Borrowings 25,00,000; Long-term Provisions 7 5,00,000; Current Liabilities 10,00,000. Total assets to debt ratio is
Option 1: 3:2
Option 2: 5:2
Option 3: 2.5:1
Option 4: None of the above
Correct Answer: None of the above
Solution :
Answer =
1.3:1
Total assets to debt ratio=$\frac{\text {Total Assets}}{\text {Debt}}$=$\frac{1,30,00,000}{1,00,00,000}$=1.3:1.
Total Assets = SHare capital + Reserve and surplus. + long term Borrowings + long term Provisions + Current liabilities.= 12,00,000+8,00,000+25,00,000+75,00,000+10,00,000=1,30,00,000.
Debt=Long term borrowings+long term provision=25,00,000+75,00,000=1,00,00,000.
Hence, the correct option is 4.
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