Question 33 Chapter 4 of +2-B - USHA Publication 12 Class

Question 33 Chapter 4 of +2-B

33. (Debt Equity Ratio/Proprietary Ratio/Total Asset to Debt Ratio) Calculate

Debt Equity Ratio
Proprietary Ratio
Total Assets to Debt Ratio
From the following information

12% Debentures	5,00,000
Loan from HDFC	2,50,000
Trade Payable	3,50,000
Equity share Capital	12,50,000
Reserve	2,50,000
Surplus i.e. Balance in Statement of Profit and Loss	1,50,000
Goodwill	2,50,000
Other fixed Assets	17,50,000
Current Assets	7,50,000

The solution of Question 33 Chapter 4 of +2-B: –

(i) Debt Equity Ratio	=	Total Long term Debt
		Shareholder’s Fund

Total Long term Debt	=	12% Debentures + Loan from HDFC
	=	₹ 5,00,000 + ₹ 2,50,000
	=	₹ 7,50,000
Shareholder’s Fund	=	Equity share Capital + Reserve + Surplus i.e. Balance in Statement of Profit and Loss
	=	₹ 12,50,000 + ₹ 2,50,000 + ₹ 1,50,000
	=	₹ 16,50,000

Debt Equity Ratio	=	₹ 7,50,000
Debt Equity Ratio	=	₹ 16,50,000

	=	0.45: 1

(ii) Proprietary Ratio	=	Proprietor’s Funds
		Total Assets

Proprietor’s Funds	=	Equity share Capital + Reserve + Surplus i.e. Balance in Statement of Profit and Loss
	=	₹ 12,50,000 + ₹ 2,50,000 + ₹ 1,50,000
	=	₹ 16,50,000
Shareholder’s Fund	=	Fixed Assets + current Assets
	=	₹ 17,50,000 + ₹ 7,50,000
	=	₹ 25,00,000

Debt Equity Ratio	=	₹ 16,50,000
Debt Equity Ratio	=	₹ 25,00,000

	=	0.66 : 1

(iii) Total Assets to Debt Ratio	=	Total Assets
		Long term Debt

Total Assets	=	Other Fixed Assets + Current Assets + Goodwill
	=	₹ 17,50,000 + ₹ 7,50,000 + ₹ 2,50,000
	=	₹ 27,50,000
Long term Debt	=	12% Debentures + Loan from HDFC
	=	₹ 5,00,000 + ₹ 2,50,000
	=	₹ 7,50,000

(iii) Total Assets to Debt Ratio	=	₹ 27,50,000
(iii) Total Assets to Debt Ratio	=	₹ 7,50,000

	=	3.66: 1

End of Solution

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