Debt-Equity ratio is a measure of :

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Target Exam

CUET

Subject

Accountancy

Chapter

Accounting Ratios

Question:

On the basis of the following information, answer the question :

Particulars	Amount (Rs.)
Share Capital :
Equity share capital (Rs. 10 each)	12,00,000
12% Preference share capital	3,00,000
Reserves & Surplus	5,00,000
10% Debentures	12,00,000
Current Liabilities	3,00,000
Fixed Assets	28,00,000
Current Assets	7,00,000
Net profit after tax as per Statement of
Profit & Loss	4,50,000
Tax	1,50,000
Market Price of the Share	34

Debt-Equity ratio is a measure of :

Options:

Profitability of business

Liquidity position of business

Efficiency in use of business resources

Solvency of business

Correct Answer:

Solvency of business

Explanation:

The correct answer is Option (4) - Solvency of business