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Question 26 Chapter 4 of +2-B
II. Solvency (Long-Term) Ratio
26. (Debt Equity Ratio) From the following Balance Sheet of XY Limited calculate Debt Equity Ratio
| Balance Sheet of XY Limited | |
| As at 31st March 2018 | |
| Particular | ₹ |
| I. Equity and Liabilities | |
| 1. Shareholders’ Funds | |
| Equity Share Capital | 7,00,000 |
| Reserves and Surplus | 2,00,000 |
| 2. Non-Current Liabilities | |
| Long-term Borrowing : | |
| 10% Debentures | 6,00,000 |
| 3. Current Liabilities | |
| Trade Payable | 90,000 |
| Short term Provision | 20,000 |
| Total | 16,10,000 |
| II. Assets : | |
| 1. Non-Current Assets | |
| Fixed Assets | |
| Tangible Assets | 10,00,000 |
| Intangible Assets | 3,00,000 |
| Other Non current Assets | |
| Unamortised Loss on issue of debenture | 50,000 |
| 2. Current Assets | |
| Inventory | 2,50,000 |
| Other Current Assets | |
| Prepaid Expenses | 10,000 |
| Total | 16,10,000 |
| Debt Equity Ratio | = | Debt |
| Shareholders Funds |
| Debt | = | 10% Debentures |
| = | ₹ 6,00,000 | |
| Shareholders Funds | = | Share Capital + Reserves |
| = | ₹ 7,00,000 + ₹ 2,00,000 | |
| = | ₹ 9,00,000 |
| Debt Equity Ratio | = | ₹ 6,00,000 |
| ₹ 9,00,000 | ||
| = | 2: 3 |
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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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