On the basis of above case, calculate de

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Target Exam

CUET

Subject

-- Accountancy Part B

Chapter

Accounting Ratios

Question:

On the basis of following information, answer the questions:

Particulars	Amount (₹)
Inventory	1,00,000
Total current assets	1,60,000
Shareholders funds	4,00,000
13% debentures	3,00,000
Current liabilities	1,00,000
Net profit before tax	3,51,000
Cost of revenue from operations	5,00,000

On the basis of above case, calculate debt equity ratio.

Options:

2:1

1:0.75

0.75:1

1:2

Correct Answer:

0.75:1

Explanation:

The correct answer is option 3- 0.75:1.

Debt-equity ratio = Debt/Equity

13% debenture is debt and shareholders funds is equity.

= 3,00,000/4,00,000
= 0.75 :1