Question

total debt equity ratio is 4:3 its total assets is ₹7000 lakhs & it's short term debt is ₹ 500 lakhs .if total debt consist of long term debt as well as short term debt ,the amount of long term debt is ​

Answer 1

Answer:

I don't think so.. this question is wrng

Answer 2

Answer:

3,500 Lakhs

Explanation:

• Debt Equity ratio = 4/3

• Total asset = 7000 Lakhs

We know that Total assets = Total liability.

therefore, Total liability will be 7,000 lakhs.

Total liability = Equity + short term liability + long term liability

So. total debt will become = 4/7 * 7000

                                            = 4,000

short term liability + long term liability = 4000

short term debt given 500 lakhs

so,

long term liability = 4000 - 500

                               = 3,500

Hence, long term debt = 3,500 Lakhs. .

• Debt equity ratio expresses the relationship between long term debt and shareholder's fund.
• It indicates the ratio of funds which are acquired by long term borrowings in comparisons to shareholder's funds,
• Debt equity ratio is calculated by dividing long term debts / shareholders funds.
• = debt / equity.
• = long term debts/ net worth .
• generally, Debt equity ratio of 2: 1 is considered safe.

Therefore, 3,500 Lakhs will be the amount of long term debts.

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