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

Debt - Equity ratio of the company is:

0.6 : 1

The correct answer is option 1- 0.6 : 1.

Debts = 10% debentures
          = 12,00,000

Shareholder funds = Share capital + Reserves and surplus
                              = 12,00,000 + 3,00,000 + 5,00,000
                              = 20,00,000

Debt-Equity Ratio = Debts / Shareholders funds
                            = 12,00,000/20,00,000
                            = 3:5
                            = 0.6:1