Question

The formula for calculating the Debt Equity Ratio is:

Options

• `"Short Term Debts"/"Shareholder’s Funds"`

• `"Shareholder’s Funds"/"Non-Current Assets"`

• `("Short Term" + "Long Term Debts")/"Shareholder’s Funds"`

• None of the Above

Answer 1

None of the Above

Explanation:

The Debt-Equity Ratio is calculated using the formula:

Debt-Equity Ratio = `"Long-Term Debt"/"Shareholders’ Funds"`

This ratio measures the relationship between long-term debt and shareholders’ funds, indicating the proportion of external debt used in the capital structure relative to the owners’ funds.