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Question
On the basis of following information received from a firm, its Total Assets-Debt Ratio will be:
Shareholder’s Funds ₹ 2,00,000; Dr. Balance of Profit & Loss ₹ 50,000; Current Liabilities ₹ 1,00,000; Current Assets ₹ 2,00,000; Total Assets ₹ 6,00,000.
Options
2 : 1
1.5 : 1
3 : 1
1.71 : 1
MCQ
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Solution
2 : 1
Explanation:
Total Assets = ₹ 6,00,000
Long-term Debts = Total Assets − Shareholder’s Funds − Current Liabilities
= 6,00,000 − 2,00,000 − 1,00,000
= ₹ 3,00,000
Total Assets to Debt Ratio = `"Total Assets"/"Long term Debts"`
= `(6,00,000)/(3,00,000)`
= 2 : 1
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