Read the following information and answer the following question.
| PARTICULARS | AMOUNT (₹) |
| Capital employed | 40,00,000 |
| Shareholder's funds | 24,00,000 |
| Current liabilities | 4,80,000 |
Calculate the total assets to debt ratio.
Answer & explanation
Correct answer: option 2
The correct answer is option 2- 2.8:1.
* Capital employed = Shareholder's funds + Long term debts
40,00,000 = 24,00,000 + long term debts
Long term debts = ₹16,00,000
* Total assets = Shareholder's funds + long-term debts + current liabilities
= 24,00,000 + 16,00,000 + 4,80,000
= ₹44,80,000
Total assets to Debt Ratio = Total assets/Long-term debts
= 44,80,000/16,00,000
= 2.8:1