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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 |
Debt Equity Ratio will be:
Options
0.8 : 1
1.67 : 1
1 : 1
1.33 : 1
MCQ
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Solution
1.67 : 1
Explanation:
Debt Equity Ratio = `"Long term Debts"/"Shareholder’s Funds"`
Long term Debts = Long term Borrowings + Long term Provisions + Debentures
= 5,00,000 + 3,00,000 + 2,00,000
= ₹ 10,00,000
Debt Equity Ratio = `(10,00,000)/(6,00,000)`
= 1.67 : 1
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Notes
The answer in the textbook is incorrect.
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