Question

Assets to Debt Ratio = 1.53 : 1.)
51. Total Debt 12,00,000; Shareholders' Funds 2,00,000; Reserves and Surplus 50,000; Current Assets
5,00,000; Working Capital 1,00,000. Calculate Total Assets to Debt Ratio.
carves and Surplus are already included in

Answer 1

Total Assets to Debt Ratio = 1.75 : 1

Explanation:

★ Appropriate Question :

Total Debt Rs. 12,00,000; Shareholders' Funds Rs. 2,00,000; Reserves and Surplus Rs. 50,000; Current Assets Rs. 5,00,000; Working Capital Rs. 1,00,000. Calculate Total Assets to Debt Ratio.

Answer :

Given :

• Total Debt = Rs. 12,00,000
• Shareholder's Funds = Rs. 2,00,000
• Reserves and Surplus = Rs. 50,00
• Current Assets = Rs. 5,00,000
• Working Capital = Rs. 1,00,000

To find :

• Calculate Total Assets to Debt Ratio

Solution :

$\sf{\underline{Total\:Assets\:to\:Debt\: Ratio} ={\dfrac{Total \: Assets}{Long \: term \: Debt}}}$

Working Capital = Current Assets - Current Liabilities

$\longrightarrow$ 1,00,000 = 5,00,000 - Current Liabilities

$\longrightarrow$ Current Liabilities = 5,00,000 - 1,00,000

Current Liabilities = Rs. 4,00,000

Long term Debt = Total Debt - Current Liabilities

$\longrightarrow$ 12,00,000 - 4,00,000

$\longrightarrow$ 8,00,000

Long term Debt = Rs. 8,00,000

Total Assets = Shareholders' Funds + Total Debt

$\longrightarrow$ 2,00,000 + 12,00,000

$\longrightarrow$ 14,00,000

Total Assets = Rs 14,00,000

Total Assets to Debt Ratio =

$\sf{\longrightarrow{\dfrac{Total \: Assets}{Long \: term \: Debt} \: = \: \dfrac{14,00,000}{8,00,000}}}$

$\sf{\longrightarrow{\dfrac{14,00,000}{8,00,000} \: = \: \dfrac{1.75}{1}}}$

Total Assets to Debt Ratio = 1.75 : 1

Answer 2

Answer:

Given :-

• Total Debt Rs. 12,00,000; Sharé holdérs Funds Rs. 2,00,000; Reserves and Su rplus Rs. 50,000; Current As sets Rs. 5,00,000; Working Capital Rs. 1,00,000.

Find Out :-

• Calculate Total As sets to De-bt Ratio.

Solution :-

As we know that,

❖ Working Capital = Current As sets - Current Liabilities

Then,

◘ Current Liabilities = Current As sets - Working Capital

➻ Current Liabilities = Rs 500000 - Rs 100000

➠ Current Liabilities = Rs 400000

Now, again we know that,

❖ Long term De-bt = Total Debt - Current Liabilities

Then,

➻ Lo-ng term De-bt = Rs 1200000 - Rs 400000

➠ Lo-ng term De-bt = Rs 800000

Again, we know that,

❖ Total As séts = Total de-bt + Sharé holdérs Fu-nd

Then,

➻ Total As séts = Rs 1200000 + Rs 200000

➠ Total As séts = Rs 1400000

Find the total As sets to De-bt ratio

As we know that,

As we know that,

❖ Total As sets to Debt Ratio = Total Ass ets/Long Term Debt,

Then,

➻ Total As séts to De-bt Ratio = 1400000/80000

➻ Total As sets to Debt Ratio = 14/8

➻ Total As sets to Debt Ratio = 1.75/1

➠ Total As sets to De-bt Ratio = 1.75 : 1

Therefore, The total As sets to De-bt ratio is 1.75 : 1.