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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% |
Total Assets will be:
Options
₹ 12,00,000
₹ 87,50,000
₹ 93,75,000
₹ 75,00,000
MCQ
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Solution
₹ 87,50,000
Explanation:
Total Debt = Long-term Borrowings + 6% Debentures
= 36,00,000 + 6,00,000
= ₹ 42,00,000
Debt-Equity Ratio = `"Total Debt"/"Shareholder’s Funds"`
1.2 = `(42,00,000)/"Shareholder’s Funds"`
Shareholder’s Funds = `(42,00,000)/(1.2)`
= ₹ 35,00,000
Proprietary Ratio = `"Shareholder’s Funds"/"Total Assets"`
`40/100` = `(35,00,000)/"Total Assets"`
Total Assets = `(35,00,000 xx 100)/(40)`
= ₹ 87,50,000
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Notes
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