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Question
Total Assets ₹ 2,60,000; Total Debts ₹ 1,80,000; Current Liabilities ₹ 20,000. Calculate Debt to Equity Ratio.
Sum
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Solution
Total Debts = 1,80,000
Current Liabilities = 20,000
Long-term Debts = Total Debts − Current Liabilities
= 1,80,000 − 20,000 = 1,60,000
Equity = Total Assets − Total Debt
= 2,60,000 − 1,80,000 = 80,000
`"Debt - Equity Ratio" = "Long Term Debts"/"Equity" = 160000/80000 = 2 : 1`
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