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Question
Total Debt ₹ 40,00,000; Share Capital ₹ 15,00,000; Reserve and Surplus ₹ 8,00,000; Current Liabilities ₹ 5,00,000; Working Capital ₹ 7,00,000. Calculate Debt to Total Assets Ratio.
Numerical
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Solution
Debt to Total Assets Ratio = `"Long Term Debts"/"Total Assets"`
Long-term Debts = Total Debt − Current Liabilities
= ₹ 40,00,000 − ₹ 5,00,000
= ₹ 35,00,000
Total Assets = Share Capital + Reserve and Surplus + Total Debt
= ₹ 15,00,000 + ₹ 8,00,000 + ₹ 40,00,000
= ₹ 63,00,000
Debt to Total Assets Ratio = `(₹ 35,00,000)/(₹ 63,00,000)`
= 0.56 : 1
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