Particular rs in lakhs net worth 250 total assets 600 long term debt 200 current liabilites 150 the debt equity ratio of company will be
Answers
Particular rs in lakhs net worth 250 total assets 600 long term debt 200 current liabilites 150 the debt equity ratio of
The debt equity ratio of company will be 0.8
Explanation:
Given that
Net worth = 250
Total assets = 600
Long term debt = 200
Current liabilities = 150
So by considering the above information, the debt equity ratio is
Debt equity ratio = Debt ÷ Equity
where,
Debt = long term debt = 200
And, equity is
Total assets = Total liabilities + shareholder equity
where,
Total assets = 600
Total liabilities = Long term debt + current liabilities
= 200 + 150
= 350
So, the shareholder equity is
= 600 - 350
= 250
Therefore, the debt equity ratio is
= 200 ÷ 250
= 0.8
Hence, the debt equity ratio of the company will be 0.8
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