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Question
On the basis of the following information, calculate Total Assets to Debt Ratio:
|
Particulars |
₹ |
Particulars |
₹ | ||
|
Capital Employed |
50,00,000 |
Share Capital |
35,00,000 | ||
|
Current Liabilities |
20,00,000 |
10% Debentures |
10,00,000 | ||
| Land and Building | 60,00,000 | General Reserve | 3,00,000 | ||
| Trade Receivable | 4,00,000 | Surplus, i.e., Balance in Statement of Profit and Loss | 2,00,000 | ||
| Cash and Cash Equivalents | 5,00,000 | ||||
|
Investment (Trade) |
1,00,000 |
|
|||
Sum
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Solution
Total Assets to Debt Ratio = `"Total Assets"/"Long term Debt"`
Total Assets = Land and Buildings + Trade Receivables + Cash and Cash Equivalents + Investments (Trade)
= 60,00,000 + 4,00,000 + 5,00,000 + 1,00,000
= Rs 70, 00,000
Long Term Debts = Capital Employed - Shareholders’ funds
= 50,00,000 – 40,00,000
= Rs 10,00,000
Shareholder’s Fund = Share Capital + Reserve and Surplus
= 35,00,000 + 3,00,000 + 2, 00,000
= Rs 40,00,000
Total Assets to Debt Ratio =`7000000/1000000 = 7 : 1`
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