Question

8. Calculate Debt-Equity Ratio from the following information :
Total Assets. 3,50,000
Total Debt. 2,50,000
Current Liabilities. 80,000
(Ans. 1.7: 1]

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Answer 1

Answer:

Debt-Equity ratio is 1.70 : 1

Explanation:

Equity = Total Assets - Total Debt

           = 350000 - 250000

           = 100000

long term debt = Total Debt - Current Liabilities

                         = 250000 - 80000

                         = 170000

Debt-Equity ratio = long term debt / Equity

                            = 170000 / 100000

                            = 1.70 : 1

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