Calculate Debt equity Ratio :
13% Debentures ₹ 6,00,000
Shareholders fund ₹ 8,00,000
Net Profit before tax ₹ 3,51,000
Current Liabilities ₹ 1,60,000
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) - 0.75 : 1.
Debt = 13% debentures
= 6,00,000
Equity = shareholders funds
= 8,00,000
Debt-equity ratio = Debt/Equity
= 6,00,000/8,00,000
= 0.75 :1
*NOTE- PROFIT IS ALREADY INCLUDED IN SHAREHOLDERS FUNDS AS (SHAREHOLDER FUNDS = SHARE CAPITAL + RESERVES & SURPLUS + MONEY RECEIVED AGAINST SHARE WARRANTS).