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Home Questions AJD4PDWEBS
Target Exam

CUET

Subject

Accountancy

Chapter

Accounting Ratios

Question:

Calculate the total assets to debt ratio from the following information.

PARTICULARS AMOUNT (₹)
Equity share capital 1500000
General reserve 1000000
Profit and loss balance ( negative) 100000
Debentures 1000000
Loan from bank 700000
Current liabilities 400000
Goodwill 500000
Other non-current assets 2200000
Current assets 1800000
Options:

2.65:1

3:2

2:2.65

2.95:2

Correct Answer:

2.65:1

Explanation:

Total assets to Debt Ratio = Total assets/Long-term debts
                                            =  4500000/ 1700000
                                           = 2.65:1

 * Total assets = Goodwill + other current assets + current assets
                  = 500000 + 2200000 + 1800000
                  = ₹4500000

* Long term debts = Debentures + loan from bank
                            = 1000000 + 700000
                             = ₹1700000

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