Question 13 Marks
From the following balance sheet of a company, calculate Debt-Equity Ratio:
| Balance Sheet | ||
| Particulars | Note No. | ₹ |
| I. Equity and Liabilities | ||
| 1. Shareholders' funds | ||
| (a) Share capital | 8,00,000 | |
| (b) Reserves and Surplus | 1 | 1,00,000 |
| 2. Share application money pending allotment | 2,00,000 | |
| 3. Non-Current Liabilities | ||
| Long-term borrowings | 1,50,000 | |
| Current liabilities | 1,50,000 | |
| 14,00,000 | ||
| II. Assets | ||
| 1. Non-Current Assets | ||
| a) Fixed assets | ||
| -Tangible assets | 2 | 11,00,000 |
| 2. Current Assets | ||
| a) Inventories | ||
| b) Trade receivables | 90,000 | |
| c) Cash and cash equivalents | 1,10,000 | |
| 14,00,000 | ||
| Notes to Accounts | |
| ₹ | |
| 1. Share Capital | |
| Equity Share Capital | 6,00,000 |
| Preference Share Capital | 2,00,000 |
| 8,00,000 |
| Fixed Assets | |
| ₹ | |
| 2. Tangible Assets: | |
| Plant and Machinery | 5,00,000 |
| Land and Building | 4,00,000 |
| Motor Car | 1,50,000 |
| Furniture | 50,000 |
| 11,00,000 |
Answer
View full question & answer→Debt-Equity Ratio = $\frac{\text { Long - term Debts }}{\text { Equity (Shareholders' Funds) }}$
Long-term Debts = Long-term Borrowings
= ₹ 1,50,000
Equity = Share capital + Reserves and surplus + Share application money pending allotment
= ₹ 8,00,000 + ₹ 1,00,000 + ₹ 2,00,000 = ₹ 11,00,000
Debt Equity Ratio $=\frac{1,50,000}{11,00,000}=0.136: 1$
Long-term Debts = Long-term Borrowings
= ₹ 1,50,000
Equity = Share capital + Reserves and surplus + Share application money pending allotment
= ₹ 8,00,000 + ₹ 1,00,000 + ₹ 2,00,000 = ₹ 11,00,000
Debt Equity Ratio $=\frac{1,50,000}{11,00,000}=0.136: 1$
