Question : Which of the following statements is correct?
Option 1: Debt to equity ratio indicates the proportion of funds which are acquired by long-term borrowings in comparison to shareholder's funds.
Option 2: The debt to equity ratio is calculated to ascertain the soundness of the long-term financial policies of the firm.
Option 3: Debt Equity Ratio $=\frac{\text { Debt }}{\text { Equity }}$
Option 4: All of the above
Correct Answer: All of the above
Solution : Answer = All of the above.
All of the statements are correct regarding the Debt to Equity ratio. It indicates the proportion of funds acquired through long-term borrowings relative to shareholder's funds, assesses the soundness of long-term financial policies and is calculated by dividing total debt by total equity, providing insights into the company's leverage and financial stability.
Hence, the correct option is 4.
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