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`
