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Question
On the basis of following data, a Company’s Total Assets-Debt Ratio will be:
Working Capital ₹ 4,50,000; Current Liabilities ₹ 1,50,000; Non-Current Assets ₹ 4,00,000; Debentures ₹ 2,00,000; Long Term Bank Loan ₹ 50,000.
Options
5 : 1
4 : 1
2.5 : 1
20 : 1
MCQ
Fill in the Blanks
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Solution
4 : 1
Explanation:
Total Assets-Debt Ratio = `"Total Assets"/"Total Debt"`
Current Assets = Working Capital + Current Liabilities
= 4,50,000 + 1,50,000
= ₹ 6,00,000
Total Assets = Current Assets + Non-Current Assets
= 6,00,000 + 4,00,000
= ₹ 10,00,000
Total Debt = Debentures + Long-Term Bank Loan
= 2,00,000 + 50,000
= ₹ 2,50,000
Total Assets-Debt Ratio = `(10,00,000)/(2,50,000)`
= 4 : 1
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