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.
Answer & explanation
Correct answer: option 3
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