Question : The debt-equity Ratio of a company is 1: 2. The Purchase of a fixed Asset for Rs.5,00,000 on a long-term deferred payment basis will increase, decrease or not change the ratio.
Option 1: Increase
Option 2: Decrease
Option 3: No change
Option 4: Can't say
Answer (1)
25th Jan, 2024
Correct Answer: Increase
Solution : Answer = Increase
Purchase of fixed Assets on long-term Deferred Payment, the Debt Equity Ratio will increase because long-term debts are increased but the total shareholder fund remains unchanged.
Hence, the correct option is 1.
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