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From the Following Balance Sheet of Abc Ltd. as at 31st March, 2019, Calculate Debt to Equity Ratio: - Accountancy

Sum

From the following Balance Sheet of ABC Ltd. as at 31st March, 2019, Calculate Debt to Equity Ratio:

Particulars

I. EQUITY AND LIABILITIES  

1. Shareholder's Funds

 

(a) Share Capital:

 

(i) Equity Share Capital

5,00,000

 

(ii) 10% Preference Share Capital

5,00,000

10,00,000

(b) Reserves and Surplus

2,40,000

2. Non-Current Liabilities 

 

Long-term Borrowings (Debentures)

2,50,000

3. Current Liabilities :

 

(a) Trade Payables

4,30,000

(b) Other Current Liabilities

20,000

(c) Short-term Provisions: Provision for Tax 

3,00,000

Total

22,40,000

II. ASSETS  

1. Non-Current Assets

 

Fixed Assets:

 

(i) Tangible Assets

6,40,000

(ii) Intangible Assets

1,00,000

   

2. Current Assets

 

(a) Inventories

7,50,000

(b) Trade Receivables

6,40,000

(c) Cash and Cash Equivalents

1,10,000

Total

22,40,000

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Solution

Long-term Debt = Debentures = 2,50,000

Equity = Equity Share Capital + 10% Preference Share Capital + Reserves and Surplus

= 5,00,000 + 5,00,000 + 2,40,000 = 12,40,000

`"Debt - Equity Ratio" = "Long-term Debts"/"Equity" 250000/1240000 = 0.2 : 1`

  Is there an error in this question or solution?
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APPEARS IN

TS Grewal Class 12 Accountancy - Analysis of Financial Statements
Chapter 3 Accounting Ratios
Exercise | Q 43 | Page 96
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