# From the Following Information , Compute Debt-equity Ratio - Accountancy

From the Following information , compute Debt-Equity Ratio:

Rs.

Long Term Borrowings          2,00,000

Long Term Provision             1,00,000

Current Liabilities                    50,000

Non-Current-Assets              3,60,000

Current -Assets                       90,000

#### Solution

"Debt Equity Ratio =""Long Term Debt"/"Shareholder's Funds"

Total Assets = total Liabilities + Shareholder’s Funds

Total Assets = Current Assets + Non-Current Assets

= 90,000 + 3,60,000

= 4,50,000

Total Liabilities = Long-Term Borrowings + Long-Term Provisions + Current Liabilities

= 2,00,000 + 1,00,000 + 50,000

= 3,50,000

Therefore, Shareholder's funds = Total Assets – Total Liabilities

= 4,50,000 – 3,50,000

= 1,00,000

Long-Term Debt = Long Term Borrowings + Long-term Provisions

= 2,00,000 + 1,00,000

= Rs.3,00,000

"Therefore, Debt Equity Ratio ="300000/100000=3:1

Concept: Solvency Ratios - Debt to Equity Ratio
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