calculate debt equity ratio from the following: tangible fixed assets 2450000, intangible fixed assets 300000, current assets 334000, current liabilities 84000, long term borrowing 1600000, long term provision 150000
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Answer:
From the following information, compute Debt-Equity Ratio:
Long Term Borrowings - 2,00,000
Long Term Provisions - 1,00,000
Current Liabilities - 50,000
Non-current-Assets - 3,60,000
Current-Assets - 90,000
(b) The current ratio of X. Ltd is 2 : 1. State with reason which of the following transaction would (i) increase; (ii) decrease or (iii) not change the ratio.
(1) Included in the trade payables was a bills payable of Rs 9,000 which was met on maturity.
(2) Company issued 1,00,000 equity shares of Rs 10 each to the Vendors of machinery purchased.
December 26, 2019avatar
Aiswaryaa Kamlesh
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ANSWER
Debt- Equity Ratio =
Shareholder
′
sFunds
Long−TermDebt
Total Assets = Total Liabilities + Shareholder's Funds
Total Assets = Current Assets + Non-Current Assets
= 1,80,000 + 7,20,000 = 9,00,000
Total Liabilities = Long Term Borrowings + Long-Term Provisions + Current Liabilities
= 4,00,000 +2,00,000+1,00,000 = 7,00,000
Therefore, Shareholder's funds = Total Assets Total Liabilities
= 9,00,000 7,00,000 = 2,00,000 Long-Term Debt = Long Term Borrowings + Long-term Provisions = 4,00,000+2,00,000 = Rs 6,00,000
Therefore, Debt -equity ratio =
2,00,000
6,00,000
=3:1
(b) Current ratio =
CurrentLiabilities
CurrentAssets
(1) A bill payable of Rs. 9,000 was met on maturity will affect:
1.Trade Payable will reduce by Rs.9,000
2.Cash will reduce by Rs.9,000
Simultaneous decreases in current assets and current liabilities will improve current ratio
Issue of share of Rs.10,00,000 to vendor of machinery will affect the following
1.Increases on the balance of machinery
2.Increase in the amount of share capital
This transaction will neither affect current liabilities nor current assets.Thus ,current ratio will remain unchanged.
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