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Assuming Debt Equity Ratio of 2 : 1, which of the following will decrease this ratio? - Accounts

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Question

Particulars
Current Assets 3,00,000
Non-Current Assets 13,00,000
Long term Borrowings 5,00,000
Long term Provisions 3,00,000
6% Debentures 2,00,000
Trade Payables 2,00,000
Share Capital 4,00,000
Shareholder’s Funds 6,00,000

Assuming Debt Equity Ratio of 2 : 1, which of the following will decrease this ratio?

Options

  • Redemption of Preference Shares.

  • Conversion of Debentures into shares.

  • Purchase of a fixed asset on long-term deferred basis.

  • Sale of a fixed asset at a loss.

MCQ
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Solution

Conversion of Debentures into shares.

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Chapter 14: Ratio Analysis - CASE BASED MCQs - 3 [Page 14.46]

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D. K. Goel Accountancy Volume 1 and 2 [English] Class 12 ISC
Chapter 14 Ratio Analysis
CASE BASED MCQs - 3 | Q (c) | Page 14.46
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