Practicing Success

Register
Start Free Mocks
CUETMOCK

Ace Your

CUET Preparation Today

Start Free Mocks
Home Questions VXUBS3KMRS
Target Exam

CUET

Subject

Accountancy

Chapter

Accounting Ratios

Question:

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

Particulars Amount (₹)
Share Capital:  
Equity share capital (₹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 450000
Tax 150000
Market Price of the Share 34

Debt - Equity ratio of the company is:

Options:

0.6 : 1

0.75 : 1

0.8 : 1

1 : 1

Correct Answer:

0.6 : 1

Explanation:

Debt-Equity Ratio= Debts / Shareholders funds
                           = 1200000/2000000
                           = 3:5
                           = 0.6:1

Debts = 10% debentures
           = 1200000

Shareholder funds = Share capital + Reserves and surplus
                              = 1200000 + 300000 + 500000
                              = 2000000

CUET Questions