Question

Debt to Capital Employed ratio is 0.3:1. State whether the following transaction, will improve, decline or will have no change on the Debt to Capital Employed Ratio. Also give a reason for the same.

Conversion of Debentures into Equity Shares of ₹ 2,00,000.

विकल्प

• Ratio will improve.

• Ratio will decline.

• Ratio has no change.

Answer 1

Ratio will decline.

Reason – Debt will decrease but Capital Employed will remain the same.