Target Exam

CUET

Subject

-- Accountancy Part B

Chapter

Accounting Ratios

Question:

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

PARTICULARS AMOUNT (₹)
Capital employed 4000000
Shareholder's funds 2400000
Current liabilities 480000

 

Options:

2:1

2.8:1

3:2

2.6:1

Correct Answer:

2.8:1

Explanation:

Total assets to Debt Ratio = Total assets/Long-term debts
                                           =
4480000/1600000
                                           = 2.8:1

* Capital employed = shareholder's funds + long term debts
   4000000 = 2400000 + long term debts
   Long term debts = ₹1600000

* Total assets= Shareholder's funds + long-term debts + current liabilities
                 = 2400000 + 1600000 + 480000
                 = ₹4480000