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Question 25 Chapter 14 of Class 12 Part – 2 – 2024
II. Solvency (Long-Term) Ratio
25. (Debt Equity Ratio) Calculate Debt Equity Ratio from the Balance Sheet of X Limited as on 31st March 2018:
| Particular | Note No. | ₹ |
| I. Equity and Liabilities | ||
| Shareholders’ Funds | ||
| Equity Share Capital | ||
| 80,000 Shares of ₹10 each fully paid up | 8,00,000 | |
| 11% Redeemable Preference Share Capital | ||
| 4,000 shares of ₹100 each fully paid up | 4.00.000 | |
| Reserves and Surplus | ||
| Securities Premium Reserve | 80,000 | |
| General Reserve | 5,80,000 | |
| Surplus i.e.. balance in statement of Profit and Loss | 1,40,000 | |
| Non-Current Liabilities | ||
| Long-term Borrowing : | ||
| 12% Debentures | 10,00,000 | |
| 10,000 Debentures of ₹100 each | ||
| Current Liabilities | ||
| Trade Payable | 2,20,000 | |
| Outstanding Expenses | 60,000 | |
| Provisions | ||
| Provision for Taxation | 2,20,000 | |
| 35,00,000 | ||
| II. Assets : | ||
| Non-Current Assets | ||
| Tangible Assets | ||
| Land and Building | 6,20,000 | |
| Plant and Machinery | 12,00,000 | |
| Furniture and Fittings | 1,80,000 | |
| Current Assets | ||
| Inventory | 5,30,000 | |
| Trade Receivable | 6,05,000 | |
| Cash at Bank | 3,00,000 | |
| Cash in hand | 65,000 | |
| 35,00,000 |
| Debt Equity Ratio | = | Debt |
| Shareholders Funds |
| Debt | = | 12% Debentures |
| = | ₹ 10,00,000 | |
| Shareholders Funds | = | Equity Share Capital + Preference Share Capital + Securities Premium Reserve + General Reserve + Balance of Statement of P&L |
| = | ₹ 8,00,000 + ₹ 4,00,000 + ₹ 80,000 + ₹ 5,80,000 + ₹ 1,40,000 | |
| = | ₹ 20,000,00 |
| Debt Equity Ratio | = | ₹ 10,00,000 |
| ₹ 20,00,000 | ||
| = | 1: 2 |
Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
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