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Question
From the following information, calculate Debt to Total Assets Ratio:
| ₹ | ₹ | ||
| 8% Debentures | 30,00,000 | Share Capital | 20,00,000 |
| Loan from Bank | 10,00,000 | Reserve and Surplus | 5,00,000 |
| Short-term Borrowings | 8,60,000 | Surplus, i.e., Balance in Statement of Profit & Loss | 2,20,000 |
Numerical
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Solution
Debt to Total Assets Ratio = `"Long term Debts"/"Total Assets"`
Long-term Debts = 8% Debentures + Loan from Bank
= ₹ 30,00,000 + ₹ 10,00,000
= ₹ 40,00,000
Total Assets = 8% Debentures + Loan from Bank + Short-term Borrowings + Share Capital + Reserve and Surplus
= ₹ 30,00,000 + ₹ 10,00,000 + ₹ 8,60,000 + ₹ 20,00,000 + ₹ 5,00,000
= ₹ 73,60,000
Debt to Total Assets Ratio = `(₹ 40,00,000)/(₹ 73,60,000)`
= 0.54 : 1
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