If Capital Employed of a company is 10,00,000; Total Debts 8,00,000 and its Current Liability is 3,00,000 , then its Debt Equity Ratio will be:
1 )1:1
2)8:10
3)5: 10
4)None of these
Answers
Answer:
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Explanation:
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
none is correct answer
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Elements of Book Keeping and Accountancy
Nature of Accounts and Rules of Debit and Credit
Explain the rules of debit and credit
Calculate debt equity ratio...
ACCOUNTANCY
Calculate debt equity ratio, from the following information:
Total external liabilities = Rs. 5,00,000
Balance sheet total = Rs. 10,10,000
Current liabilities = Rs. 1,00,000
Fictitious assets = Rs. 10,000
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VIDEO EXPLANATION
ANSWER
Long-term debt = Total external liabilities - Current liabilities
= Rs. 5,00,000 - Rs. 1,00,000
= Rs. 4,00,000
Total non-fictitious assets = Total Assets - Fictitious assets
= Rs. 10,10,000 - Rs. 10,000
= Rs. 10,00,000
Shareholders funds = Non-fictitious total assets - Total liabilities
= Rs. 10,00,000 - Rs. 5,00,000
= Rs. 5,00,000
Debt equity ratio = Rs. 4,00,000/Rs. 5,00,000
= 4:5