Question

Total Debt ₹ 6,00,000; Current Liabilities ₹ 2,00,000, Capital Employed ₹ 6,00,000. Calculate the Total Assets to Debt Ratio.

Answer 1

Calculation of Debt (Long-term Debt):

\[\text{Debt} = \text{Total Debt} - \text{Current Liabilities}\]

$$\text{Debt} = ₹ 6,00,000 - ₹ 2,00,000$$

$${\text{Debt} = ₹ 4,00,000}$$

Calculation of Total Assets:

$$\text{Total Assets} = \text{Capital Employed} + \text{Current Liabilities}$$

$$\text{Total Assets} = ₹ 6,00,000 + ₹ 2,00,000$$

$${\text{Total Assets} = ₹ 8,00,000}$$

Calculation of Total Assets to Debt Ratio:

$$\text{Total Assets to Debt Ratio} = \frac{\text{Total Assets}}{\text{Debt}}$$

$$\text{Total Assets to Debt Ratio} = \frac{8,00,000}{4,00,000} = 2$$

Total Assets to Debt Ratio = 2 : 1