From the following data , calculate Debt to Equity Ratio. i. Share Capital = 1,00,000 ii. General Reserve = 50,000 iii. Balance in Statement of Profit and Loss A/c = 10,000 iv.Long term Debts = 80,000 v. Bills Payable = 20,000 vi. Bank Overdraft = 10,000
Options:
2:01
1:02
1.5 : 1
0.8 : 1
Correct Answer:
1:02
Explanation:
Debt to Equity = Long term Debts/ Share holder's Fund = 80,000/ 1,60,000 = 1:2 * Shareholder's Fund = Share Capital + General Reserves + Balance in P & L = 1,00,000 + 50,000 + 10,000 * Long term Debts = 80,000