ABC Ltd., a telecom company was passing through a bad phase of business cycle and banks were unwilling to lend further amount. It decided to do introspection and compiled following information for the purposes of analysis:

Calculate debt to equity ratio.

2.5:1

Debt-Equity Ratio = Long−term Debts/ Shareholders’ Funds
                              = 500000 / 200000
                              = 2.5:1

*Long-term debt = Total debt - current liabilities
                        = 900000 - 400000
                        = ₹500000