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Question
Calculate the debt to equity ratio from the given information:
| Particulars | (₹) |
| Current Liabilities | ₹ 3,50,000 |
| Working Capital | ₹ 2,00,000 |
| Non-current Assets | ₹ 8,00,000 |
| Shareholders’ funds | ₹ 6,00,000 |
Numerical
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Solution
Working Capital = Current Assets – Current Liabilities
2,00,000 = Current Assets – 3,50,000
Current Assets = ₹ 5,50,000
Total assets = Non-current Assets + Current Assets
= 5,50,000 + 8,00,000
= ₹ 13,50,000
Debt = Total Assets – Shareholders funds – Current Liabilities
= 13,50,000 – 6,00,000 – 3,50,000
= ₹ 4,00,000
Debt Equity Ratio = `"Debt"/"Equity"`
= `(4,00,000)/(6,00,000)`
= 0.67 : 1
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