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Question
| Long-term Borrowings | ₹ 36,00,000 |
| 6% Debentures | ₹ 6,00,000 |
| Current Liabilities | ₹ 9,00,000 |
| Debt-Equity Ratio | 1.2 |
| Proprietary Ratio | 40% |
Shareholder’s Funds will be:
Options
₹ 35,00,000
₹ 30,00,000
₹ 42,50,000
₹ 37,50,000
MCQ
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Solution
₹ 35,00,000
Explanation:
Long-term Debts = Long-term Borrowings + Debentures
= 36,00,000 + 6,00,000
= ₹ 42,00,000
Debt Equity Ratio = `"Long term Debts"/"Shareholder’s Funds"`
1.2 = `(42,00,000)/"Shareholder’s Funds"`
Shareholder’s Funds = `(42,00,000)/(1.2)`
= ₹ 35,00,000
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Notes
The answer in the textbook is incorrect.
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