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Question
Total Assets ₹12,50,000; Total Debts ₹10,00,000; Current Liabilities ₹5,00,000.
Calculate Debt to Equity Ratio.
Solution
Total Assets = 12,50,000
Total Debts = 10,00,000
Equity = Total Assets − Total Liabilities
= 12,50,000 − 10,00,000 = 2,50,000
Long-term Debts = Total Debts − Current Liabilities
= 10,00,000 − 5,00,000 = 5,00,000
`"Debt - Equity Ratio" = "Long-term Debts"/"Equity" = 500000/250000 = 2:1`
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