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Question
Total Debt ₹15,00,000; Current Liablities ₹5,00,000; Capital Employed ₹15,00,000. Calculate Total Assets to Debt Ratio.
Sum
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Solution
Total Assets to Debt Ratio = `"Total Assets"/"Long term Debt"`
Capital Employed = Total Assets – Current Liabilities
15,00,000 = Total Assets – 5,00,000
Total Assets = Rs 20,00,000
Long Term Debt = Total Debt – Current Liabilities
= 15,00,000 – 5,00,000
= Rs 10,00,000
Total Assets to Debt Ratio = `2000000/1000000 = 2 : 1`
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