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Question 35 Chapter 4 of +2-B
35. (Debt Equity Ratio/Proprietary Ratio) Calculate the following ratios from the balance sheet given below :
(a) Debt equity ratio (b) Proprietary ratio
| Particulars | ₹ |
| I. Equity and Liabilities | |
| Shareholders’ Funds | |
| Equity Share capital | 2,00,000 |
| Preference Share Capital | 50,000 |
| Reserve and Surplus | 50,000 |
| Non Current Liabilities | |
| Long term Borrowings | |
| 12% Mortgage Loan | 2,20,000 |
| 10% Debentures | 80,000 |
| Current Liabilities | |
| Short term Borrowings | |
| Bank overdraft | 50,000 |
| Trade Payable | 40,000 |
| Outstanding Expenses | 10,000 |
| 7,00,000 | |
| II. Assets | |
| Non Current Assets | |
| Tangible Assets | |
| Fixed Assets | 5,00,000 |
| Current Assets | |
| Inventory | 1,10,000 |
| Trade Receivable | 60,000 |
| Prepaid Expenses | 4,000 |
| Cash in hand | 26,000 |
| 7,00,000 |
| (i) Debt Equity Ratio | = | Total Long term Debt |
| Shareholder’s Fund |
| Total Long term Debt | = | 12% Mortgage Loan + 10% Debentures |
| = | ₹ 2,20,000 + ₹ 80,000 | |
| = | ₹ 3,00,000 | |
| Shareholder’s Fund | = | Equity share Capital Preference share Capital + Reserves and Surplus |
| = | ₹ 2,00,000 + ₹ 50,000 + ₹ 50,000 | |
| = | ₹ 3,00,000 |
| Debt Equity Ratio | = | ₹ 3,00,000 |
| ₹ 3,00,000 | ||
| = | 1: 1 |
| (ii) Proprietary Ratio | = | Proprietor’s Funds |
| Total Assets |
| Proprietor’s Funds | = | Equity share Capital Preference share Capital + Reserves and Surplus |
| = | ₹ 2,00,000 + ₹ 50,000 + ₹ 50,000 | |
| = | ₹ 3,00,000 | |
| Total Assets | = | Fixed Assets + Inventory + Trade Receivable + Prepaid Expenses +Cash at Bank |
| = | ₹ 5,00,000 + ₹ 1,10,000 + ₹ 60,000 + ₹ 4,000 + ₹ 26,000 | |
| = | ₹ 7,00,000 |
| Debt Equity Ratio | = | ₹ 3,00,000 |
| ₹ 7,00,000 | ||
| = | 0.43: 1 |
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.
This guide covers "Question 35 Chapter 4 of +2-B - USHA Publication 12 Class", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to USHA Publication Part 2 volume I.
It is primarily curated for Class 11 and Class 12 high school commerce, accounting, and economics students, as well as aspirants preparing for board exams or CA Foundation.
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