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# From the Following, Calculate (A) Debt Equity Ratio (B) Total Assets to Debt Ratio (C) Proprietary Ratio. - Accountancy

ConceptTypes of Ratios

#### Question

From the following, calculate (a) Debt Equity Ratio (b) Total Assets to Debt Ratio (c) Proprietary Ratio.

 Rs. Equity Share Capital 75,000 Preference Share Capital 25,000 General Reserve 45,000 Balance in the Statement of Profits and Loss 30,000 Debentures 75,000 Trade Payables 40,000 Outstanding Expenses 10,000

#### Solution

a ) debt Equity Ratio = "Debt"/ "Equity"

Equity/ Shareholder funds = Equity Share Capital + Preference Share Capital + General Reserve + Accumulated Profit

= 75,000 + 25,000 + 45,000 + 30,000

Debt = Debentures = 75,000

Debt Equity ratio = [75,000]/[1,75,000] = 3/7 = 0.43 : 1

b) Total Assets  to debt Ratio = "Total assets"/"Debt"

Total Assets = Equity Share Capital + Preference share Capital + General Reserve + Accumulated Profits + Debentures + Sundry Creditors + Outstanding Expenses (∵ Total liabilities is equal to total assets)

= 75,000 + 25,000 + 45,000 + 30,000 + 75,000 + 40,000 + 10,000
= 3,00,000

Total Assets to Debt Ratio = [3,00,000]/[75,000] = 4 : 1

C) Proprietary Ratio = "Shareholder Funds"/"Net Assets"

Proprietary Ratio = [175,000]/[3,00,000] = 7/12 = 7 : 12 or 0.58 : 1

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Solution From the Following, Calculate (A) Debt Equity Ratio (B) Total Assets to Debt Ratio (C) Proprietary Ratio. Concept: Types of Ratios.
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