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Calculate Debt to Total Assets Ratio from the following information: Shareholder’s Funds, Reserve and Surplus ₹ 32,00,000, 12,00,000 Total Debts, Trade Payables, Bank Overdraft ₹ 24,00,000, 5,60,000 - Accounts

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Question

Calculate Debt to Total Assets Ratio from the following information:

   
Shareholder’s Funds 32,00,000 Total Debts 24,00,000
Reserve and Surplus 12,00,000 Trade Payables 5,60,000
    Bank Overdraft 40,000
Numerical
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Solution

Debt to Total Assets Ratio = `"Long term Debts"/"Total Assets"`

Long-term Debts = Total Debts − Trade Payables − Bank Overdraft

= ₹ 24,00,000 − ₹ 5,60,000 − ₹ 40,000

= ₹ 18,00,000

Total Assets = Shareholder’s Funds + Total Debts

= ₹ 32,00,000 + ₹ 24,00,000

= ₹ 56,00,000

Debt to Total Assets Ratio = `(₹ 18,00,000)/(₹ 56,00,000)`

= 0.32 : 1

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Chapter 14: Ratio Analysis - PRACTICAL QUESTIONS [Page 14.121]

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D. K. Goel Accountancy Volume 1 and 2 [English] Class 12 ISC
Chapter 14 Ratio Analysis
PRACTICAL QUESTIONS | Q 35. | Page 14.121
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