Question 40 Chapter 4 of +2-B - T.S. Grewal 12 Class

Question 40 Chapter 4 of +2-B

Debt to Equity Ratio

40. Calculate Debt to Equity Ratio from the following information:

	Rs.		Rs.
Fixed Assets (Gross)	8,40,000	Current Assets	3,50,000
Accumulated Depreciation	1,40,000	Current Liabilities	2,80,000
Non-current Investments	14,000	10% Long-term borrowings	4,20,000
Long-term loans and Advances	56,000	Long-term Provision	1,40,000

Calculate ratios indicating the Long-term and the Short-term financial position of the company.

The solution of Question 40 Chapter 4 of +2-B: -

Equity	=	Total Assets - Total Debts
	=	(8,40,000 - 1,40,000) + 14,000 + 56,000 + 3,50,000 – (4,20,000 + 1,40,000 + 2,80,000)
Equity	=	Rs. 2,80,000
Debt	=	Long-Term Borrowings + Long-Term Provisions
	=	Rs. 4,20,000 + Rs. 1,40,000
Debt	=	Rs. 5,60,000

Debt to Equity Ratio	=	Debts	=	Rs.5,60,000
		Equity		Rs.2,80,000
	=	2: 1

 

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Also, Check out the solved question of previous Chapters: -

T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

• Chapter No. 1 - Financial Statement of Not-For-Profit Organisations
• Chapter No. 2 - Accounting for Partnership Firms - Fundamentals
• Chapter No. 3 - Goodwill: Nature and Valuation
• Chapter No. 4 - Change in Profit-Sharing Ratio Among the Existing Partners
• Chapter No. 5 - Admission of a Partner
• Chapter No. 6 - Retirement/Death of a Partner
• Chapter No. 7 - Dissolution of a Partnership Firm

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

• Chapter No. 8 - Company Accounts -  Accounting for Share Capital
• Chapter No. 9 - Company Accounts - Issue of Debentures
• Chapter No. 10 - Redemption of Debentures

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

• Chapter No. 1 - Financial Statements of a Company
• Chapter No. 2 - Financial Statement Analysis 
• Chapter No. 3 - Tools of Financial Statement Analysis - Comparative Statements and Common- Size Statements
• Chapter No. 4 - Accounting Ratios
• Chapter No. 5 - Cash Flow Statement

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication